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Cases on Copyright

G.R. Nos. 76649-51 August 19, 1988

20TH CENTURY FOX FILM CORPORATION, petitioner,vs.

COURT OF APPEALS, EDUARDO M. BARRETO, RAUL SAGULLO and FORTUNELEDESMA, respondents.

Siguion Reyna, Montecillo & Ongsiako Law Office for petitioner.

B.C. Salazar & Associates for respondents.

GUTIERREZ, JR., J .:

The petitioner questions the application of the constitutional provision against illegal searches and seizures to raids

conducted in connection with the government's anti-film piracy campaign. The main issue hinges on whether or notthe judge properly lifted the search warrants he issued earlier upon the application of the National Bureau of

Investigation on the basis of the complaint filed by the petitioner.

In a letter-complaint dated August 26, 1985, petitioner 20th Century Fox Film Corporation through counsel sought the

National Bureau of Investigation's (NBI) assistance in the conduct of searches and seizures in connection with thelatter's anti-film piracy campaign. Specifically, the letter-complaint alleged that certain videotape outlets all over

Metro Manila are engaged in the unauthorized sale and renting out of copyrighted films in videotape form whichconstitute a flagrant violation of Presidential Decree No. 49 (otherwise known as the Decree on the Protection of

Intellectual Property).

Acting on the letter-complaint, the NBI conducted surveillance and investigation of the outlets pinpointed by the petitioner and subsequently filed three (3) applications for search warrants against the video outlets owned by the

private respondents. The applications were consolidated and heard by the Regional Trial Court of Makati, Branch 132.

On September 4, 1985, the lower court issued the desired search warrants.

Armed with the search warrants, the NBI accompanied by the petitioner's agents, raided the video outlets and seized

the items described therein. An inventory of the items seized was made and left with the private respondents.

Acting on a motion to lift search warrants and release seized properties filed by the private respondents, the lower

court issued an order dated October 8, 1985, lifting the three (3) search warrants issued earlier against the private

respondents by the court. The dispositive portion of the order reads:WHEREFORE, the Court hereby orders that Search Warrants Nos. SW- 85-024; issued against Eduardo M. Barreto of

the Junction Video, etc., Paranaque, Metro Manila; SW No. 85-025, issued against Raul M. Sagullo of South VideoBug Center, Inc., etc., also of No. 5355 Pres. Avenue BF Homes, Parañaque, Metro Manila; and SW No. 85-026,

issued against Fortune A. Ledesma of Sonix Video Services of San Antonio Plaza, Forbes Park, Makati, Metro Manila,

be lifted.

Consequently, the articles listed in the returns of the three search warrants which could not be a basis of any criminal prosecution, now in the possession of the National Bureau of Investigation which under the law must be delivered to

this Court, but which the NBI failed to do, are hereby ordered to be returned to their owners through their lawyer, Atty.Benito Salazar or his agents or representatives, against proper receipt, to be forwarded to this Court for record

purposes, as proof that said properties have been returned to the possession of the rightful owners." (p. 34, Rollo)

The lower court denied a motion for reconsideration filed by the petitioner in its order dated January 2, 1986.The petitioner filed a petition for certiorari with the Court of Appeals to annul the October 8, 1985 and January 2,

1986 orders of the lower court. The petition was dismissed.

Hence, this petition.

The main issue hinges on the meaning of "probable cause" within the context of the constitutional provision against

illegal searches and seizures (Section 3, Article IV, 1973 Constitution, now, Section 2, Article Ill, 1987 Constitution.

The petitioner maintains that the lower court issued the questioned search warrants after finding the existence of a

probable cause justifying their issuance. According to the petitioner, the lower court arrived at this conclusion on the basis of the depositions of applicant NBI's two witnesses which were taken through searching questions and answers



Cases on Copyright

by the lower court.

Section 2, Article III of the present Constitution which substantially reproduces Section 3, Article IV of the 1973Constitution on illegal searches and seizures provides:

The right of the people to be secure in their persons, houses, papers, and effects against unreasonable searches and

seizures of whatever nature and for any purpose shall be inviolable, and no search warrant or warrant of arrest shall

issue except upon probable cause to be determined personally by the judge after examination under oath or affirmation of the complainant and the witnesses he may produce, and particularly describing the place to be searched

and the persons or things to be seized.

This constitutional right protects a citizen against wanton and unreasonable invasion of his privacy and liberty as tohis person, papers and effects. We have explained in the case of People v. Burgos (144 SCRA 1) citingVillanueva v.

Querubin (48 SCRA 345) why the right is so important:

It is deference to one's personality that lies at the core of this right, but it could be also looked upon as a recognition of

a constitutionally protected area, primarily one's home, but not necessarily thereto confined. (Cf. Hoffa v. UnitedStates, 385 US 293 119661) What is sought to be guarded is a man's prerogative to choose who is allowed entry to his

residence. In that haven of refuge, his individuality can assert itself not only in the choice of who shall be welcome but likewise in the kind of objects he wants around him. There the state, however powerful, does not as such have

access except under the circumstances above noted, for in the traditional formulation, his house, however humble, ishis castle. Thus is outlawed any unwarranted intrusion by government, which is called upon to refrain from any

invasion of his dwelling and to respect the privacies of his life. (Cf Schmerber v. California, 384 US 757 [1966],Brennan, J. and Boyd v. United States, 116 630 [1886]). In the same vein, Landynski in his authoritative work (Search

and Seizure and the Supreme Court [1966]), could fitly characterize constitutional right as the embodiment of a"spiritual concept: the belief that to value the privacy of home and person and to afford its constitutional protection

against the long reach of government is no less than to value human dignity, and that his privacy must not be disturbed

except in case of overriding social need, and then only under stringent procedural safeguards."( ibid , p. 74).

The government's right to issue search warrants against a citizen's papers and effects is circumscribed by therequirements mandated in the searches and seizures provision of the Constitution.

In the case of Burgos, Sr. v. Chief of Staff, AFP (133 SCRA 800), we defined probable cause for a valid search "assuch facts and circumstances which would lead a reasonably discreet and prudent man to believe that an offense has

been committed and that the objects sought in connection with the offense are in the place sought to be searched."This constitutional provision also demands "no less than personal knowledge by the complainant or his witnesses of

the facts upon which the issuance of a search warrant may be justified" in order to convince the judge, not theindividual making the affidavit and seeking the issuance of the warrant, of the existence of a probable cause. (Alvarez

v. Court of First Instance, 64 Phil. 33; Burgos, Sr. v. Chief of Staff, AFP, supra).

In the instant case, the lower court lifted the three questioned search warrants against the private respondents on theground that it acted on the application for the issuance of the said search warrants and granted it on the

misrepresentations of applicant NBI and its witnesses that infringement of copyright or a piracy of a particular film

have been committed. Thus the lower court stated in its questioned order dated January 2,1986:

According to the movant, all three witnesses during the proceedings in the application for the three search warrantstestified of their own personal knowledge. Yet, Atty. Albino Reyes of the NBI stated that the counsel or representative

of the Twentieth Century Fox Corporation will testify on the video cassettes that were pirated, so that he did not have personal knowledge of the alleged piracy. The witness Bacani also said that the video cassettes were pirated without

stating the manner it was pirated and that it was Atty. Domingo that has knowledge of that fact.On the part of Atty. Domingo, he said that the re-taping of the allegedly pirated tapes was from master tapes allegedly

belonging to the Twentieth Century Fox, because, according to him, it is of his personal knowledge.

At the hearing of the Motion for Reconsideration, Senior NBI Agent Atty. Albino Reyes testified that when thecomplaint for infringement was brought to the NBI, the master tapes of the allegedly pirated tapes were shown to him

and he made comparisons of the tapes with those purchased by their man Bacani. Why the master tapes or at least thefilm reels of the allegedly pirated tapes were not shown to the Court during the application gives some misgivings as

to the truth of that bare statement of the NBI agent on the witness stand. "

Again as the application and search proceedings is a prelude to the filing of criminal cases under PD 49, the copyright



Cases on Copyright

infringement law, and although what is required for the issuance thereof is merely the presence of probable cause, that

probable cause must be satisfactory to the Court, for it is a time- honored precept that proceedings to put a man to task

as an offender under our laws should be interpreted in strictissimi juris against the government and liberally in favor of the alleged offender.

xxx xxx xxx

This doctrine has never been overturned, and as a matter of fact it had been enshrined in the Bill of Rights in our 1973Constitution.

So that lacking in persuasive effect, the allegation that master tapes were viewed by the NBI and were compared to

the purchased and seized video tapes from the respondents' establishments, it should be dismissed as not supported bycompetent evidence and for that matter the probable cause hovers in that grey debatable twilight zone between black

and white resolvable in favor of respondents herein.

But the glaring fact is that 'Cocoon,' the first video tape mentioned in the search warrant, was not even duly registered

or copyrighted in the Philippines. (Annex C of Opposition p. 152 record). So, that lacking in the requisite presentationto the Court of an alleged master tape for purposes of comparison with the purchased evidence of the video tapes

allegedly pirated and those seized from respondents, there was no way to determine whether there really was piracy,or copying of the film of the complainant Twentieth Century Fox." (pp. 37-39, Rollo)

xxx xxx xxx

The lower court, therefore, lifted the three (3) questioned search warrants in the absence of probable cause that the private respondents violated P.D. 49. As found out by the court, the NBI agents who acted as witnesses did not have

personal knowledge of the subject matter of their testimony which was the alleged commission of the offense by the private respondents. Only the petitioner's counsel who was also a witness during the application for the issuance of the

search warrants stated that he had personal knowledge that the confiscated tapes owned by the private respondentswere pirated tapes taken from master tapes belonging to the petitioner. However, the lower court did not give much

credence to his testimony in view of the fact that the master tapes of the allegedly pirated tapes were not shown to thecourt during the application.

All these factors were taken into consideration by the lower court when it lifted the three questioned search warrants.There is no truth, therefore, to the petitioner's allegation that the lower court based its January 2, 1986 order only "on

the fact that the original or master copies of the copyrighted films were not presented during the application for searchwarrants, thus leading it to conclude that it had been "misled by the applicant and his witnesses." (p. 17, Rollo)

The presentation of the master tapes of the copyrighted films from which the pirated films were allegedly copied, wasnecessary for the validity of search warrants against those who have in their possession the pirated films. The

petitioner's argument to the effect that the presentation of the master tapes at the time of application may not benecessary as these would be merely evidentiary in nature and not determinative of whether or not a probable cause

exists to justify the issuance of the search warrants is not meritorious. The court cannot presume that duplicate or copied tapes were necessarily reproduced from master tapes that it owns.

The application for search warrants was directed against video tape outlets which allegedly were engaged in the

unauthorized sale and renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.

The essence of a copyright infringement is the similarity or at least substantial similarity of the purported pirated

works to the copyrighted work. Hence, the applicant must present to the court the copyrighted films to compare themwith the purchased evidence of the video tapes allegedly pirated to determine whether the latter is an unauthorized

reproduction of the former. This linkage of the copyrighted films to the pirated films must be established to satisfy therequirements of probable cause. Mere allegations as to the existence of the copyrighted films cannot serve as basis for

the issuance of a search warrant.

Furthermore, we note that the search warrants described the articles sought to be seized as follows:

xxx xxx xxx

xxx xxx xxx

c) Television sets, Video Cassettes Recorders, rewinders, tape head cleaners, accessories, equipments and other machines used or intended to be used in the unlawful reproduction, sale, rental/lease distribution of the above -

mentioned video tapes which she is keeping and concealing in the premises above-described." (p. 26, Rollo)



Cases on Copyright

In the case of Burgos v. Chief of Staff, AFP supra, we stated:

xxx xxx xxx

Another factor which makes the search warrants under consideration constitutionally objectionable is that they are inthe nature of general warrants. The search warrants describe the articles sought to be seized in this wise:

l] All printing equipment, paraphernalia, paper, ink, photo equipment, typewriters, cabinets, tablescommunications/recording equipment, tape recorders, dictaphone and the like used and/or connected in the printing of

the 'WE FORUM' newspaper and any and all document/communications, letters and facsimile of prints related to"WE FORUM" newspaper.

2] Subversive documents, pamphlets, leaflets, books, and other publications to promote the objectives and purposes of

the subversive organizations known as Movement for Free Philippines, Light-a-Fire Movement and April 6

Movement; and

3] Motor vehicles used in the distribution/circulation of the 'WE FORUM and other subversive materials and propaganda, more particularly,

1] Toyota-Corolla, colored yellow with Plate No. NKA 892;

2] DATSUN pick-up colored white with Plate No. NKV 969;

3] A delivery truck with Plate No. NBS 542;

4] TOYOTA-TAMARAW, colored white with Plate No. PBP 665;and,

5] TOYOTA Hi-Lux, pick-up truck with Plate No. NGV 472 with marking "Bagong Silang."

In Stanford v. State of Texas (379 U.S. 476,13 L ed 2nd 431), the search warrant which authorized the search for 'books, records, pamphlets, cards, receipts, lists, memoranda, pictures, recordings and other written instruments

concerning the Communist Parties of Texas, and the operations of the Community Party in Texas," was declared void by the U.S. Supreme Court for being too general. In like manner, directions to "seize any evidence in connection with

the violation of SDC 13-3703 or otherwise' have been held too general, and that portion of a search warrant whichauthorized the seizure of any "paraphernalia which could be used to violate Sec. 54-197 of the Connecticut General

Statutes [the statute dealing with the crime of conspiracy]"' was held to be a general warrant, and therefore invalid (68Am. Jur. 2d., pp. 736-737). The description of the articles sought to be seized under the search warrants in question

cannot be characterized differently. (at pp. 814-815)

Undoubtedly, a similar conclusion can be deduced from the description of the articles sought to be confiscated under the questioned search warrants.

Television sets, video cassette recorders, reminders and tape cleaners are articles which can be found in a video tapestore engaged in the legitimate business of lending or renting out betamax tapes. In short, these articles and appliances

are generally connected with, or related to a legitimate business not necessarily involving piracy of intellectual property or infringement of copyright laws. Hence, including these articles without specification and/or particularity

that they were really instruments in violating an Anti-Piracy law makes The search warrant too general which couldresult in the confiscation of all items found in any video store. In fact, this actually happened in the instant case. Thus,

the lower court, in its questioned order dated October 8, 1985 said:

Although the applications and warrants themselves covered certain articles of property usually found in a video store,

the Court believes that the search party should have confined themselves to articles that are according to them,

evidence constitutive of infringement of copyright laws or the piracy of intellectual property, but not to other articlesthat are usually connected with, or related to, a legitimate business, not involving piracy of intellectual property, or infringement of copyright laws. So that a television set, a rewinder, and a whiteboard listing Betamax tapes, video

cassette cleaners video cassette recorders as reflected in the Returns of Search Warrants, are items of legitimate business engaged in the video tape industry, and which could not be the subject of seizure, The applicant and his

agents therefore exceeded their authority in seizing perfectly legitimate personal property usually found in a video

cassette store or business establishment." (p. 33, Rollo)

All in all, we find no grave abuse of discretion on the part of the lower court when it lifted the search warrants itearlier issued against the private respondents. We agree with the appellate court's findings to the effect that:

An assiduous examination of the assailed orders reveal that the main ground upon which the respondent Court



Cases on Copyright

anchored said orders was its subsequent findings that it was misled by the applicant (NBI) and its witnesses 'that

infringement of copyright or a piracy of a particular film have been committed when it issued the questioned

warrants.' Stated differently, the respondent Court merely corrected its erroneous findings as to the existence of probable cause and declared the search and seizure to be unreasonable. Certainly, such action is within the power and

authority of the respondent Court to perform, provided that it is not exercised in an oppressive or arbitrary manner.Indeed, the order of the respondent Court declaring the existence of probable cause is not final and does not

constitute res judicata.

A careful review of the record of the case shows that the respondent Court did not commit a grave abuse of discretionwhen it issued the questioned orders. Grave abuse of discretion' implies such capricious and whimsical exercise of

judgment as is equivalent to lack of jurisdiction, or, in other words, where the power is exercised in an arbitrary or

despotic manner by reason of passion or personal hostility, and it must be so patent and gross as to amount to anevasion of positive duty or to a virtual refusal to perform the duty enjoined or to act at all in contemplation of law.'

But far from being despotic or arbitrary, the assailed orders were motivated by a noble desire of rectifying an error,much so when the erroneous findings collided with the constitutional rights of the private respondents. In fact, the

petitioner did not even contest the righteousness and legality of the questioned orders but instead concentrated on thealleged denial of due process of law." (pp. 44-45, Rollo)

The proliferation of pirated tapes of films not only deprives the government of much needed revenues but is also an

indication of the widespread breakdown of national order and discipline. Courts should not impose any unnecessary

roadblocks in the way of the anti-film piracy campaign. However, the campaign cannot ignore or violate constitutional

safeguards. To say that the problem of pirated films can be solved only by the use of unconstitutional shortcuts is todenigrate the long history and experience behind the searches and seizures clause of the Bill of Rights. The trial courtdid not commit reversible error.

WHEREFORE, the instant petition is DISMISSED. The questioned decision and resolution of the Court of Appeals

are AFFIRMED.

SO ORDERED.

Fernan, C.J., Feliciano, Bidin and Cortes, JJ., concur



Cases on Copyright

G.R. No. 131522 July 19, 1999

PACITA I. HABANA, ALICIA L. CINCO and JOVITA N. FERNANDO, petitioners,vs.

FELICIDAD C. ROBLES and GOODWILL TRADING CO., INC., respondents.

PARDO, J .:

The case before us is a petition for review on certiorari 1 to set aside the (a) decision or the Court of Appeals 2, and (b) the resolution denying petitioners' motion for reconsideration, 3 in which the appellate

court affirmed the trial court's dismissal of the complaint for infringement and/or unfair competition anddamages but deleted the award for attorney's fees.1âwphi1.nêt

The facts are as follows:

Petitioners are authors and copyright owners of duly issued certificates of copyright registration covering their

published works, produced through their combined resources and efforts, entitled COLLEGE ENGLISH FOR

TODAY (CET for brevity), Books 1 and 2, and WORKBOOK FOR COLLEGE FRESHMAN ENGLISH, Series 1.

Respondent Felicidad Robles and Goodwill Trading Co., Inc. are the author/publisher and distributor/seller of another published work entitled "DEVELOPING ENGLISH PROFICIENCY" (DEP for brevity), Books 1 and 2 (1985 edition)

which book was covered by copyrights issued to them.

In the course of revising their published works, petitioners scouted and looked around various bookstores to check on

other textbooks dealing with the same subject matter. By chance they came upon the book of respondent Robles andupon perusal of said book they were surprised to see that the book was strikingly similar to the contents, scheme of

presentation, illustrations and illustrative examples in their own book, CET.

After an itemized examination and comparison of the two books (CET and DEP), petitioners found that several pagesof the respondent's book are similar, if not all together a copy of petitioners' book, which is a case of plagiarism and

copyright infringement.

Petitioners then made demands for damages against respondents and also demanded that they cease and desist from

further selling and distributing to the general public the infringed copies of respondent Robles' works.

However, respondents ignored the demands, hence, on July 7, 1988; petitioners filed with the Regional

Trial Court, Makati, a complaint for "Infringement and/or unfair competition with damages" 4 against privaterespondents. 5

In the complaint, petitioners alleged that in 1985, respondent Felicidad C. Robles being substantially familiar with the

contents of petitioners' works, and without securing their permission, lifted, copied, plagiarized and/or transposed

certain portions of their book CET. The textual contents and illustrations of CET were literally reproduced in the book DEP. The plagiarism, incorporation and reproduction of particular portions of the book CET in the book DEP, without

the authority or consent of petitioners, and the misrepresentations of respondent Robles that the same was her originalwork and concept adversely affected and substantially diminished the sale of the petitioners' book and caused them

actual damages by way of unrealized income.

Despite the demands of the petitioners for respondents to desist from committing further acts of infringement and for respondent to recall DEP from the market, respondents refused. Petitioners asked the court to order the submission of

all copies of the book DEP, together with the molds, plates and films and other materials used in its printing destroyed,

and for respondents to render an accounting of the proceeds of all sales and profits since the time of its publicationand sale.

Respondent Robles was impleaded in the suit because she authored and directly committed the acts of infringement

complained of, while respondent Goodwill Trading Co., Inc. was impleaded as the publisher and joint co-owner of thecopyright certificates of registration covering the two books authored and caused to be published by respondent

Robles with obvious connivance with one another.

On July 27, 1988, respondent Robles filed a motion for a bill of particulars 6 which the trial court approved

on August 17, 1988. Petitioners complied with the desired particularization, and furnished respondentRobles the specific portions, inclusive of pages and lines, of the published and copyrighted books of the



Cases on Copyright

petitioners which were transposed, lifted, copied and plagiarized and/or otherwise found their way intorespondent's book.

On August 1, 1988, respondent Goodwill Trading Co., Inc. filed its answer to the complaint 7 and alleged

that petitioners had no cause of action against Goodwill Trading Co., Inc. since it was not privy to themisrepresentation, plagiarism, incorporation and reproduction of the portions of the book of petitioners; thatthere was an agreement between Goodwill and the respondent Robles that Robles guaranteed Goodwillthat the materials utilized in the manuscript were her own or that she had secured the necessary

permission from contributors and sources; that the author assumed sole responsibility and held thepublisher without any liabili ty.

On November 28, 1988, respondent Robles filed her answer 8, and denied the allegations of plagiarismand copying that petitioners claimed. Respondent stressed that (1) the book DEP is the product of her independent researches, studies and experiences, and was not a copy of any existing valid copyrightedbook; (2) DEP followed the scope and sequence or syllabus which are common to all English grammar writers as recommended by the Association of Philippine Colleges of Arts and Sciences (APCAS), so anysimilarity between the respondents book and that of the petitioners was due to the orientation of theauthors to both works and standards and syllabus; and (3) the similarities may be due to the authors'exercise of the "right to fair use of copyrigthed materials, as guides."

Respondent interposed a counterclaim for damages on the ground that bad faith and malice attended thefiling of the complaint, because petitioner Habana was professionally jealous and the book DEP replacedCET as the official textbook of the graduate studies department of the Far Eastern University. 9

During the pre-trial conference, the parties agreed to a stipulation of facts 10 and for the trial court to first resolve the issue of infringement before disposing of the claim for damages.

After the trial on the merits, on April 23, 1993, the trial court rendered its judgment finding thus:

WHEREFORE, premises considered, the court hereby orders that the complaint filed against defendants FelicidadRobles and Goodwill Trading Co., Inc. shall be DISMISSED; that said plaintiffs solidarily reimburse defendant

Robles for P20,000.00 attorney's fees and defendant Goodwill for P5,000.00 attorney's fees. Plaintiffs are liable for cost of suit.

IT IS SO ORDERED.

Done in the City of Manila this 23rd day of April, 1993.

(s/t) MARVIE R. ABRAHAM SINGSON

Assisting Judge

S. C. Adm. Order No. 124-92 11

On May 14, 1993, petitioners filed their notice of appeal with the trial court 12, and on July 19, 1993, thecourt directed its branch clerk of court to forward all the records of the case to the Court of Appeals. 13

In the appeal, petitioners argued that the trial court completely disregarded their evidence and fullysubscribed to the arguments of respondent Robles that the books in issue were purely the product of her researches and studies and that the copied portions were inspired by foreign authors and as such notsubject to copyright. Petitioners also assailed the findings of the trial court that they were animated by bad

faith in instituting the complaint. 14

On June 27, 1997, the Court of Appeals rendered judgment in favor of respondents Robles and Goodwill Trading Co.,

Inc. The relevant portions of the decision state:

It must be noted, however, that similarity of the allegedly infringed work to the author's or proprietor's copyrightedwork does not of itself establish copyright infringement, especially if the similarity results from the fact that both

works deal with the same subject or have the same common source, as in this case.

Appellee Robles has fully explained that the portion or material of the book claimed by appellants to have been copied

or lifted from foreign books. She has duly proven that most of the topics or materials contained in her book, with particular reference to those matters claimed by appellants to have been plagiarized were topics or matters appearing



Cases on Copyright

not only in appellants and her books but also in earlier books on College English, including foreign books, e.i.

Edmund Burke's "Speech on Conciliation", Boerigs' "Competence in English" and Broughton's, "Edmund Burke's

Collection."

xxx xxx xxx

Appellant's reliance on the last paragraph on Section II is misplaced. It must be emphasized that they failed toprove that their books were made sources by appellee. 15

The Court of Appeals was of the view that the award of attorneys' fees was not proper, since there was no bad faith onthe part of petitioners Habana et al . in instituting the action against respondents.

On July 12, 1997, petitioners filed a motion for reconsideration, 16 however, the Court of Appeals deniedthe same in a Resolution 17 dated November 25, 1997.

Hence, this petition.

In this appeal, petitioners submit that the appellate court erred in affirming the trial court's decision.

Petitioners raised the following issues: (1) whether or not, despite the apparent textual, thematic andsequential similarity between DEP and CET, respondents committed no copyright infringement; (2) whether or not there wasanimus furandi on the part of respondent when they refused to withdraw the copies of CETfrom the market despite notice to withdraw the same; and (3) whether or not respondent Robles abused awriter's right to fair use, in violation of Section 11 of Presidential Decree No. 49. 18

We find the petition impressed with merit.

The complaint for copyright infringement was filed at the time that Presidential Decree No. 49 was in force. At

present, all laws dealing with the protection of intellectual property rights have been consolidated and as the law nowstands, the protection of copyrights is governed by Republic Act No. 8293. Notwithstanding the change in the law, the

same principles are reiterated in the new law under Section 177. It provides for the copy or economic rights of anowner of a copyright as follows:

Sec. 177. Copy or Economic rights. — Subject to the provisions of chapter VIII, copyright or economic rights shall

consist of the exclusive right to carry out, authorize or prevent the following acts:

177.1 Reproduction of the work or substanlial portion of the work;

177.2 Dramatization, translation, adaptation, abridgement, arrangement or other transformation of the work;

177.3 The first public distribution of the original and each copy of the work by sale or other forms of transfer of ownership;

177.4 Rental of the original or a copy of an audiovisual or cinematographic work, a work embodied in a sound

recording, a computer program, a compilation of data and other materials or a musical work in graphic form,irrespective of the ownership of the original or the copy which is the subject of the rental; (n)

177.5 Public display of the original or copy of the work;

177.6 Public performance of the work; and

177.7 Other communication to the public of the work 19

The law also provided for the limitations on copyright, thus:

Sec. 184.1 Limitations on copyright . — Notwithstanding the provisions of Chapter V, the following acts shall notconstitute infringement of copyright:

(a) the recitation or performance of a work, once it has been lawfully made accessible to the public, if done privatelyand free of charge or if made strictly for a charitable or religious institution or society; [Sec. 10(1), P.D. No. 49]

(b) The making of quotations from a published work if they are compatible with fair use and only to the extent

justified for the purpose, including quotations from newspaper articles and periodicals in the form of presssummaries; Provided , that the source and the name of the author, if appearing on the work are mentioned; (Sec. 11

third par. P.D. 49)

xxx xxx xxx



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(e) The inclusion of a work in a publication, broadcast, or other communication to the public, sound recording of film, if such inclusion is made by way of illustration for teaching purposes and is compatible with fair use:Provided , That the source and the name of the author, if appearing in the work is mentioned ; 20

In the above quoted provisions, "work" has reference to literary and artistic creations and this includesbooks and other literary, scholarly and scientific works. 21

A perusal of the records yields several pages of the book DEP that are similar if not identical with the text of CET.

On page 404 of petitioners' Book 1 of College English for Today, the authors wrote:

Items in dates and addresses:

He died on Monday, April 15, 1975.

Miss Reyes lives in 214 Taft Avenue,

Manila 22

On page 73 of respondents Book 1 Developing English Today, they wrote:

He died on Monday, April 25, 1975.

Miss Reyes address is 214 Taft Avenue Manila 23

On Page 250 of CET, there is this example on parallelism or repetition of sentence structures, thus:

The proposition is peace. Not peace through the medium of war; not peace to be hunted through the labyrinth of intricate and endless negotiations; not peace to arise out of universal discord, fomented from principle, in all parts of

the empire; not peace to depend on the juridical determination of perplexing questions, or the precise marking of the boundary of a complex government. It is simple peace; sought in its natural course, and in its ordinary haunts. It is

peace sought in the spirit of peace, and laid in principles purely pacific.

— Edmund Burke, "Speech on Criticism." 24

On page 100 of the book DEP 25, also in the topic of parallel structure and repetition, the same example isfoundin toto. The only difference is that petitioners acknowledged the author Edmund Burke, andrespondents did not.

In several other pages 26 the treatment and manner of presentation of the topics of DEP are similar if not a

rehash of that contained in CET. We believe that respondent Robles' act of lifting from the book of petitioners substantial portions of discussions and

examples, and her failure to acknowledge the same in her book is an infringement of petitioners' copyrights.

When is there a substantial reproduction of a book? It does not necessarily require that the entirecopyrighted work, or even a large portion of it, be copied. If so much is taken that the value of the originalwork is substantially diminished, there is an infringement of copyright and to an injurious extent, the work isappropriated. 27

In determining the question of infringement, the amount of matter copied from the copyrighted work is animportant consideration. To constitute infringement, it is not necessary that the whole or even a largeportion of the work shall have been copied. If so much is taken that the value of the original is sensiblydiminished, or the labors of the original author are substantially and to an injurious extent appropriated by

another, that is sufficient in point of law to constitute piracy.28

The essence of intellectual piracy should be essayed in conceptual terms in order to underscore its gravityby an appropriate understanding thereof. Infringement of a copyright is a trespass on a private domainowned and occupied by the owner of the copyright, and, therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection, consists in the doing by any person,without the consent of the owner of the copyright, of anything the sole right to do which is conferred bystatute on the owner of the copyright.29

The respondents' claim that the copied portions of the book CET are also found in foreign books and other grammar

books, and that the similarity between her style and that of petitioners can not be avoided since they come from thesame background and orientation may be true. However, in this jurisdiction under Sec 184 of Republic Act 8293 it is



Cases on Copyright

provided that:

Limitations on Copyright. Notwithstanding the provisions of Chapter V, the following shall not constituteinfringement of copyright:

xxx xxx xxx

(c) The making of quotations from a published work if they are compatible with fair use and only to the extent justified for the purpose, including quotations from newspaper articles and periodicals in the form of press

summaries: Provided , That the source and the name of the author, if appearing on the work, are mentioned.

A copy of a piracy is an infringement of the original, and it is no defense that the pirate, in such cases, didnot know whether or not he was infringing any copyright; he at least knew that what he was copying wasnot his, and he copied at his peril. 30

The next question to resolve is to what extent can copying be injurious to the author of the book being copied. Is it

enough that there are similarities in some sections of the books or large segments of the books are the same?

In the case at bar, there is no question that petitioners presented several pages of the books CET and DEP that more or

less had the same contents. It may be correct that the books being grammar books may contain materials similar as tosome technical contents with other grammar books, such as the segment about the "Author Card". However, the

numerous pages that the petitioners presented showing similarity in the style and the manner the books were presentedand the identical examples can not pass as similarities merely because of technical consideration.

The respondents claim that their similarity in style can be attributed to the fact that both of them were ex posed to the

APCAS syllabus and their respective academic experience, teaching approach and methodology are almost identical because they were of the same background.

However, we believe that even if petitioners and respondent Robles were of the same background in terms of teachingexperience and orientation, it is not an excuse for them to be identical even in examples contained in their books. The

similarities in examples and material contents are so obviously present in this case. How can similar/identicalexamples not be considered as a mark of copying?

We consider as an indicia of guilt or wrongdoing the act of respondent Robles of pulling out from Goodwill

bookstores the book DEP upon learning of petitioners' complaint while pharisaically denying petit ioners' demand. It

was further noted that when the book DEP was re-issued as a revised version, all the pages cited by petitioners tocontain portion of their book College English for Today were eliminated.

In cases of infringement, copying alone is not what is prohibited. The copying must produce an "injurious effect".Here, the injury consists in that respondent Robles lifted from petitioners' book materials that were the result of thelatter's research work and compilation and misrepresented them as her own. She circulated the book DEP for

commercial use did not acknowledged petitioners as her source.

Hence, there is a clear case of appropriation of copyrighted work for her benefit that respondent Robles committed.

Petitioners' work as authors is the product of their long and assiduous research and for another to represent it as her own is injury enough. In copyrighting books the purpose is to give protection to the intellectual product of an author.

This is precisely what the law on copyright protected, under Section 184.1 (b). Quotations from a published work if they are compatible with fair use and only to the extent justified by the purpose, including quotations from newspaper

articles and periodicals in the form of press summaries are allowed provided that the source and the name of theauthor, if appearing on the work, are mentioned.

In the case at bar, the least that respondent Robles could have done was to acknowledge petitioners Habana et .al . asthe source of the portions of DEP. The final product of an author's toil is her book. To allow another to copy the book

without appropriate acknowledgment is injury enough.

WHEREFORE, the petition is hereby GRANTED. The decision and resolution of the Court of Appeals in CA-G. R.CV No. 44053 are SET ASIDE. The case is ordered remanded to the trial court for further proceedings to receive

evidence of the parties to ascertain the damages caused and sustained by petitioners and to render decision inaccordance with the evidence submitted to it.

SO ORDERED.



Cases on Copyright

G.R. No. 161295 June 29, 2005

JESSIE G. CHING, petitioner,vs.

WILLIAM M. SALINAS, SR., WILLIAM M. SALINAS, JR., JOSEPHINE L. SALINAS, JENNIFER Y.

SALINAS, ALONTO SOLAIMAN SALLE, JOHN ERIC I. SALINAS, NOEL M. YABUT (Board of Directors

and Officers of WILAWARE PRODUCT CORPORATION), respondents.

D E C I S I O N

CALLEJO, SR., J.:

This petition for review on certiorari assails the Decision1 and Resolution2 of the Court of Appeals (CA) in CA-G.R.

SP No. 70411 affirming the January 3, 2002 and February 14, 2002 Orders3 of the Regional Trial Court (RTC) of

Manila, Branch 1, which quashed and set aside Search Warrant Nos. 01-2401 and 01-2402 granted in favor of petitioner Jessie G. Ching.

Jessie G. Ching is the owner and general manager of Jeshicris Manufacturing Co., the maker and manufacturer of a

Utility Model, described as "Leaf Spring Eye Bushing for Automobile" made up of plastic.

On September 4, 2001, Ching and Joseph Yu were issued by the National Library Certificates of Copyright

Registration and Deposit of the said work described therein as "Leaf Spring Eye Bushing for Automobile."4

On September 20, 2001, Ching requested the National Bureau of Investigation (NBI) for police/investigativeassistance for the apprehension and prosecution of illegal manufacturers, producers and/or distributors of the works.5

After due investigation, the NBI filed applications for search warrants in the RTC of Manila against William Salinas,Sr. and the officers and members of the Board of Directors of Wilaware Product Corporation. It was alleged that t he

respondents therein reproduced and distributed the said models penalized under Sections 177.1 and 177.3 of RepublicAct (R.A.) No. 8293. The applications sought the seizure of the following:

a.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of plastic polypropylene;

b.) Undetermined quantity of Leaf spring eye bushing for automobile that are made up of polyvinyl chloride plastic;

c.) Undetermined quantity of Vehicle bearing cushion that is made up of polyvinyl chloride plastic;

d.) Undetermined quantity of Dies and jigs, patterns and flasks used in the manufacture/fabrication of items a to d;

e.) Evidences of sale which include delivery receipts, invoices and official receipts.6 The RTC granted the application and issued Search Warrant Nos. 01-2401 and 01-2402 for the seizure of the

aforecited articles.7 In the inventory submitted by the NBI agent, it appears that the following articles/items wereseized based on the search warrants:

Leaf Spring eye bushing

a) Plastic Polypropylene

- C190 27 }

- C240 rear 40 }

- C240 front 41 } BAG 1

b) Polyvinyl Chloride Plastic- C190 13 }

c) Vehicle bearing cushion

- center bearing cushion 11 }

Budder for C190 mold 8 }

Diesel Mold

a) Mold for spring eye bushing rear 1 set

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Cases on Copyright

b) Mold for spring eye bushing front 1 set

c) Mold for spring eye bushing for C190 1 set

d) Mold for C240 rear 1 piece of the set

e) Mold for spring eye bushing for L300 2 sets

f) Mold for leaf spring eye bushing C190 with metal 1 set

g) Mold for vehicle bearing cushion 1 set8 The respondents filed a motion to quash the search warrants on the following grounds:

2. The copyright registrations were issued in violation of the Intellectual Property Code on the ground that:

a) the subject matter of the registrations are not artistic or literary;

b) the subject matter of the registrations are spare parts of automobiles meaning – there ( sic) are original parts that

they are designed to replace. Hence, they are not original.9

The respondents averred that the works covered by the certificates issued by the National Library are not artistic in

nature; they are considered automotive spare parts and pertain to technology. They aver that the models are notoriginal, and as such are the proper subject of a patent, not copyright.10

In opposing the motion, the petitioner averred that the court which issued the search warrants was not the proper

forum in which to articulate the issue of the validity of the copyrights issued to him. Citing the ruling of the Courtin Malaloan v. Court of Appeals,11 the petitioner stated that a search warrant is merely a judicial process designed by

the Rules of Court in anticipation of a criminal case. Until his copyright was nullified in a proper proceeding, he

enjoys rights of a registered owner/holder thereof.

On January 3, 2002, the trial court issued an Order 12 granting the motion, and quashed the search warrant on itsfinding that there was no probable cause for its issuance. The court ruled that the work covered by the certificates

issued to the petitioner pertained to solutions to technical problems, not literary and artistic as provided in Article 172of the Intellectual Property Code.

His motion for reconsideration of the order having been denied by the trial court’s Order of February 14, 2002, the petitioner filed a petition for certiorari in the CA, contending that the RTC had no jurisdiction to delve into and

resolve the validity of the copyright certificates issued to him by the National Library. He insisted that his works are

covered by Sections 172.1 and 172.2 of the Intellectual Property Code. The petitioner averred that the copyrightcertificates are prima facie evidence of its validity, citing the ruling of the United States Court of Appeals in Wildlife Express Corporation v. Carol Wright Sales, Inc.13 The petitioner asserted that the respondents failed to adduce

evidence to support their motion to quash the search warrants. The petitioner noted that respondent William Salinas, Jr.was not being honest, as he was able to secure a similar copyright registration of a similar product from the National

Library on January 14, 2002.

On September 26, 2003, the CA rendered judgment dismissing the petition on its finding that the RTC did not commit

any grave abuse of its discretion in issuing the assailed order, to wit:

It is settled that preliminarily, there must be a finding that a specific offense must have been committed to justify theissuance of a search warrant. In a number of cases decided by the Supreme Court, the same is explicitly provided, thus:

"The probable cause must be in connection with one specific offense, and the judge must, before issuing the warrant,

personally examine in the form of searching questions and answers, in writing and under oath, the complainant andany witness he may produce, on facts personally known to them and attach to the record their sworn statementstogether with any affidavit submitted.

"In the determination of probable cause, the court must necessarily resolve whether or not an offense exists to justify

the issuance or quashal of the search warrant."

In the instant case, the petitioner is praying for the reinstatement of the search warrants issued, but subsequently

quashed, for the offense of Violation of Class Designation of Copyrightable Works under Section 177.1 in relation toSection 177.3 of Republic Act 8293 , when the objects subject of the same, are patently not copyrightable.

It is worthy to state that the works protected under the Law on Copyright are: literary or artistic works (Sec. 172) and



























Cases on Copyright

derivative works (Sec. 173). The Leaf Spring Eye Bushing and Vehicle Bearing Cushion fall on neither classification.

Accordingly, if, in the first place, the item subject of the petition is not entitled to be protected by the law on copyright,

how can there be any violation?14

The petitioner’s motion for reconsideration of the said decision suffered the same fate. The petitioner forthwi th filedthe present petition for review on certiorari, contending that the revocation of his copyright certificates should be

raised in a direct action and not in a search warrant proceeding.

The petitioner posits that even assumingex argumenti

that the trial court may resolve the validity of his copyright in a

proceeding to quash a search warrant for allegedly infringing items, the RTC committed a grave abuse of its discretionwhen it declared that his works are not copyrightable in the first place. He claims that R.A. No. 8293, otherwise

known as the Intellectual Property Code of the Philippines, which took effect on January 1, 1998, provides in nouncertain terms that copyright protection automatically attaches to a work by the sole fact of its creation, irrespective

of its mode or form of expression, as well as of its content, quality or purpose.15 The law gives a non-inclusivedefinition of "work" as referring to original intellectual creations in the literary and artistic domain protected from the

moment of their creation; and includes original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial design and other works of applied art under Section 172.1(h) of R.A. No. 8293. lawphil.net

As such, the petitioner insists, notwithstanding the classification of the works as either literary and/or artistic, the saidlaw, likewise, encompasses works which may have a bearing on the utility aspect to which the petitioner’s utility

designs were classified. Moreover, according to the petitioner, what the Copyright Law protects is the author’sintellectual creation, regardless of whether it is one with utilitarian functions or incorporated in a useful article

produced on an industrial scale.

The petitioner also maintains that the law does not provide that the intended use or use in industry of an article eligiblefor patent bars or invalidates its registration under the Law on Copyright. The test of protection for the aesthetic is not

beauty and utility, but art for the copyright and invention of original and ornamental design for design patents.16 In

like manner, the fact that his utility designs or models for articles of manufacture have been expressed in the field of automotive parts, or based on something already in the public domain does not automatically remove them from the

protection of the Law on Copyright.17

The petitioner faults the CA for ignoring Section 218 of R.A. No. 8293 which gives the same presumption to anaffidavit executed by an author who claims copyright ownership of his work.

The petitioner adds that a finding of probable cause to justify the issuance of a search warrant means merely areasonable suspicion of the commission of the offense. It is not equivalent to absolute certainty or a finding of actual

and positive cause.18 He assists that the determination of probable cause does not concern the issue of whether or notthe alleged work is copyrightable. He maintains that to justify a finding of probable cause in the issuance of a search

warrant, it is enough that there exists a reasonable suspicion of the commission of the offense.

The petitioner contends that he has in his favor the benefit of the presumption that his copyright is valid; hence, the burden of overturning this presumption is on the alleged infringers, the respondents herein. But this burden cannot be

carried in a hearing on a proceeding to quash the search warrants, as the issue therein is whether there was probable

cause for the issuance of the search warrant. The petitioner concludes that the issue of probable cause should beresolved without invalidating his copyright.

In their comment on the petition, the respondents aver that the work of the petitioner is essentially a technical solution

to the problem of wear and tear in automobiles, the substitution of materials, i.e., from rubber to plastic matter of polyvinyl chloride, an oil resistant soft texture plastic material strong enough to endure pressure brought about by the

vibration of the counter bearing and thus brings bushings. Such work, the respondents assert, is the subject of copyright under Section 172.1 of R.A. No. 8293. The respondents posit that a technical solution in any field of human

activity which is novel may be the subject of a patent, and not of a copyright. They insist that the certificates issued by

the National Library are only certifications that, at a point in time, a certain work was deposited in the said office.Furthermore, the registration of copyrights does not provide for automatic protection. Citing Section 218.2(b) of R.A.

No. 8293, the respondents aver that no copyright is said to exist if a party categorically questions its existence andlegality. Moreover, under Section 2, Rule 7 of the Implementing Rules of R.A. No. 8293, the registration and deposit

of work is not conclusive as to copyright outlay or the time of copyright or the right of the copyright owner. Therespondents maintain that a copyright exists only when the work is covered by the protection of R.A. No. 8293.

The petition has no merit.






















Cases on Copyright

The RTC had jurisdiction to delve into and resolve the issue whether the petitioner’s utility models are copyrightable

and, if so, whether he is the owner of a copyright over the said models. It bears stressing that upon the filing of the

application for search warrant, the RTC was duty-bound to determine whether probable cause existed, in accordancewith Section 4, Rule 126 of the Rules of Criminal Procedure:

SEC. 4. Requisite for issuing search warrant. – A search warrant shall not issue but upon probable cause in connection

with one specific offense to be determined personally by the judge after examination under oath or affirmation of thecomplainant and the witnesses he may produce, and, particularly, describing the place to be searched and the things to

be seized.

In Solid Triangle Sales Corporation v. The Sheriff of RTC QC, Br. 93,19 the Court held that in the determination of

probable cause, the court must necessarily resolve whether or not an offense exists to justify the issuance of a searchwarrant or the quashal of one already issued by the court. Indeed, probable cause is deemed to exist only where facts

and circumstances exist which could lead a reasonably cautious and prudent man to believe that an offense has beencommitted or is being committed. Besides, in Section 3, Rule 126 of the Rules of Criminal Procedure, a search

warrant may be issued for the search and seizure of personal property (a) subject of the offense; (b) stolen or embezzled and other proceeds or fruits of the offense; or (c) used or intended to be used as the means of committing

an offense.

The RTC is mandated under the Constitution and Rules of Criminal Procedure to determine probable cause. The court

cannot abdicate its constitutional obligation by refusing to determine whether an offense has been committed.20 Theabsence of probable cause will cause the outright nullification of the search warrant.21

For the RTC to determine whether the crime for infringement under R.A. No. 8293 as alleged in an application is

committed, the petitioner-applicant was burdened to prove that (a) respondents Jessie Ching and Joseph Yu were theowners of copyrighted material; and (b) the copyrighted material was being copied and distributed by the respondents.

Thus, the ownership of a valid copyright is essential.22

Ownership of copyrighted material is shown by proof of originality and copyrightability. By originality is meant that

the material was not copied, and evidences at least minimal creativity; that it was independently created by the author and that it possesses at least same minimal degree of creativity.23 Copying is shown by proof of access to copyrighted

material and substantial similarity between the two works .24 The applicant must thus demonstrate the existence andthe validity of his copyright because in the absence of copyright protection, even original creation may be freely

copied.25

By requesting the NBI to investigate and, if feasible, file an application for a search warrant for infringement under

R.A. No. 8293 against the respondents, the petitioner thereby authorized the RTC (in resolving the application), todelve into and determine the validity of the copyright which he claimed he had over the utility models. The petitioner

cannot seek relief from the RTC based on his claim that he was the copyright owner over the utility models and, at thesame time, repudiate the court’s jurisdiction to ascertain the validity of his claim without running afoul to the doctri ne

of estoppel.

To discharge his burden, the applicant may present the certificate of registration covering the work or, in its absence,

other evidence.26 A copyright certificate provides prima facie evidence of originality which is one element of copyright validity. It constitutes prima facie evidence of both validity and ownership27 and the validity of the facts

stated in the certificate.28 The presumption of validity to a certificate of copyright registration merely orders the burden of proof. The applicant should not ordinarily be forced, in the first instance, to prove all the multiple facts that

underline the validity of the copyright unless the respondent, effectively challenging them, shifts the burden of doingso to the applicant.29 Indeed, Section 218.2 of R.A. No. 8293 provides:

218.2. In an action under this Chapter:

(a) Copyright shall be presumed to subsist in the work or other subject matter to which the action relates if thedefendant does not put in issue the question whether copyright subsists in the work or other subject matter; and

(b) Where the subsistence of the copyright is established, the plaintiff shall be presumed to be the owner of the

copyright if he claims to be the owner of the copyright and the defendant does not put in issue the question of hisownership.

A certificate of registration creates no rebuttable presumption of copyright validity where other evidence in the recordcasts doubt on the question. In such a case, validity will not be presumed.30

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Cases on Copyright

To discharge his burden of probable cause for the issuance of a search warrant for violation of R.A. No. 8293, the

petitioner-applicant submitted to the RTC Certificate of Copyright Registration Nos. 2001-197 and 2001-204 dated

September 3, 2001 and September 4, 2001, respectively, issued by the National Library covering work identified asLeaf Spring Eye Bushing for Automobile and Vehicle Bearing Cushion both classified under Section 172.1(h) of R.A.

No. 8293, to wit:

SEC. 172. Literary and Artistic Works. – 172.1. Literary and artistic works, hereinafter referred to as "works," areoriginal intellectual creations in the literary and artistic domain protected from the moment of their creation and shall

include in particular:

...

(h) Original ornamental designs or models for articles of manufacture, whether or not registrable as an industrial

design, and other works of applied art.

Related to the provision is Section 171.10, which provides that a "work of applied art" is an artistic creation with

utilitarian functions or incorporated in a useful article, whether made by hand or produced on an industrial scale.

But, as gleaned from the specifications appended to the application for a copyright certificate filed by the petitioner,the said Leaf Spring Eye Bushing for Automobile is merely a utility model described as comprising a generally

cylindrical body having a co-axial bore that is centrally located and provided with a perpendicular flange on one of itsends and a cylindrical metal jacket surrounding the peripheral walls of said body, with the bushing made of plastic that

is either polyvinyl chloride or polypropylene.31 Likewise, the Vehicle Bearing Cushion is illustrated as a bearing

cushion comprising a generally semi-circular body having a central hole to secure a conventional bearing and a plurality of ridges provided therefore, with said cushion bearing being made of the same plastic materials.32 Plainly,

these are not literary or artistic works. They are not intellectual creations in the literary and artistic domain, or worksof applied art. They are certainly not ornamental designs or one having decorative quality or value.

It bears stressing that the focus of copyright is the usefulness of the artistic design, and not its marketability. The

central inquiry is whether the article is a work of art.33 Works for applied art include all original pictorials, graphics,and sculptural works that are intended to be or have been embodied in useful article regardless of factors such as mass

production, commercial exploitation, and the potential availability of design patent protection.34

As gleaned from the description of the models and their objectives, these articles are useful articles which are defined

as one having an intrinsic utilitarian function that is not merely to portray the appearance of the article or to conveyinformation. Indeed, while works of applied art, original intellectual, literary and artistic works are copyrightable,

useful articles and works of industrial design are not.35 A useful article may be copyrightable only if and only to theextent that such design incorporates pictorial, graphic, or sculptural features that can be identified separately from, and

are capable of existing independently of the utilitarian aspects of the article.

We agree with the contention of the petitioner (citing Section 171.10 of R.A. No. 8293), that the author’s intellectual

creation, regardless of whether it is a creation with utilitarian functions or incorporated in a useful article produced onan industrial scale, is protected by copyright law. However, the law refers to a "work of applied art which is an artistic

creation." It bears stressing that there is no copyright protection for works of applied art or industrial design whichhave aesthetic or artistic features that cannot be identified separately from the utilitarian aspects of the

article.36 Functional components of useful articles, no matter how artistically designed, have generally been deniedcopyright protection unless they are separable from the useful article.37

In this case, the petitioner’s models are not works of applied art, nor artistic works. They are utility models, usefularticles, albeit with no artistic design or value. Thus, the petitioner described the utility model as follows:

LEAF SPRING EYE BUSHING FOR AUTOMOBILE

Known bushings inserted to leaf-spring eye to hold leaf-springs of automobile are made of hard rubber. These rubber

bushings after a time, upon subjecting them to so much or intermittent pressure would eventually wore ( sic) out that

would cause the wobbling of the leaf spring.

The primary object of this utility model, therefore, is to provide a leaf-spring eye bushing for automobile that is madeup of plastic.

Another object of this utility model is to provide a leaf-spring eye bushing for automobiles made of polyvinyl chloride,

an oil resistant soft texture plastic or polypropylene, a hard plastic, yet both causes cushion to the leaf spring, yet































Cases on Copyright

strong enough to endure pressure brought about by the up and down movement of said leaf spring.

Yet, an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a much longer lifespan than the rubber bushings.

Still an object of this utility model is to provide a leaf-spring eye bushing for automobiles that has a very simple

construction and can be made using simple and ordinary molding equipment.

A further object of this utility model is to provide a leaf-spring eye bushing for automobile that is supplied with a

metal jacket to reinforce the plastic eye bushing when in engaged with the steel material of the leaf spring.

These and other objects and advantages will come to view and be understood upon a reading of the detaileddescription when taken in conjunction with the accompanying drawings.

Figure 1 is an exploded perspective of a leaf-spring eye bushing according to the present utility model;

Figure 2 is a sectional view taken along line 2-2 of Fig. 1;

Figure 3 is a longitudinal sectional view of another embodiment of this utility model;

Figure 4 is a perspective view of a third embodiment; and

Figure 5 is a sectional view thereof.

Referring now to the several views of the drawings wherein like reference numerals designated same parts throughout,

there is shown a utility model for a leaf-spring eye bushing for automobile generally designated as reference numeral10.

Said leaf-spring eye bushing 10 comprises a generally cylindrical body 11 having a co-axial bore 12 centrally

provided thereof.

As shown in Figs. 1 and 2, said leaf-spring eye bushing 10 is provided with a perpendicular flange 13 on one of itsends and a cylindrical metal jacket 14 surrounding the peripheral walls 15 of said body 11. When said leaf-spring

bushing 10 is installed, the metal jacket 14 acts with the leaf-spring eye (not shown), which is also made of steel or cast steel. In effect, the bushing 10 will not be directly in contact with steel, but rather the metal jacket, making the life

of the bushing 10 longer than those without the metal jacket.

In Figure 2, the bushing 10 as shown is made of plastic, preferably polyvinyl chloride, an oil resistant soft texture

plastic or a hard polypropylene plastic, both are capable to endure the pressure applied thereto, and, in effect, would

lengthen the life and replacement therefor.Figure 3, on the other hand, shows the walls 16 of the co-axial bore 12 of said bushing 10 is insertably provided with a

steel tube 17 to reinforce the inner portion thereof. This steel tube 17 accommodates or engages with the leaf-spring bolt (not shown) connecting the leaf spring and the automobile’s chassis.

Figures 4 and 5 show another embodiment wherein the leaf eye bushing 10 is elongated and cylindrical as to itsconstruction. Said another embodiment is also made of polypropylene or polyvinyl chloride plastic material. The steel

tube 17 and metal jacket 14 may also be applied to this embodiment as an option thereof .38

VEHICLE BEARING CUSHION

Known bearing cushions inserted to bearing housings for vehicle propeller shafts are made of hard rubber. These

rubber bushings after a time, upon subjecting them to so much or intermittent pressure would eventually be worn outthat would cause the wobbling of the center bearing.

The primary object of this utility model therefore is to provide a vehicle-bearing cushion that is made up of plastic.

Another object of this utility model is to provide a vehicle bearing cushion made of polyvinyl chloride, an oil resistantsoft texture plastic material which causes cushion to the propeller’s center bearing, yet strong enough to endure

pressure brought about by the vibration of the center bearing.

Yet, an object of this utility model is to provide a vehicle-bearing cushion that has a much longer life span than rubber bushings.

Still an object of this utility model is to provide a vehicle bearing cushion that has a very simple construction and can be made using simple and ordinary molding equipment.







Cases on Copyright

These and other objects and advantages will come to view and be understood upon a reading of the detailed

description when taken in conjunction with the accompanying drawings.

Figure 1 is a perspective view of the present utility model for a vehicle-bearing cushion; and

Figure 2 is a sectional view thereof.

Referring now to the several views of the drawing, wherein like reference numeral designate same parts throughout,there is shown a utility model for a vehicle-bearing cushion generally designated as reference numeral 10.

Said bearing cushion 10 comprises of a generally semi-circular body 11, having central hole 12 to house a

conventional bearing (not shown). As shown in Figure 1, said body 11 is provided with a plurality of ridges 13 whichserves reinforcing means thereof.

The subject bearing cushion 10 is made of polyvinyl chloride, a soft texture oil and chemical resistant plastic materialwhich is strong, durable and capable of enduring severe pressure from the center bearing brought about by the rotating

movement of the propeller shaft of the vehicle.39

A utility model is a technical solution to a problem in any field of human activity which is new and industrially

applicable. It may be, or may relate to, a product, or process, or an improvement of any of the aforesaid. 40Essentially,a utility model refers to an invention in the mechanical field. This is the reason why its object is sometimes described

as a device or useful object.41 A utility model varies from an invention, for which a patent for invention is, likewise,available, on at least three aspects: first, the requisite of "inventive step" 42 in a patent for invention is not required;

second, the maximum term of protection is only seven years43 compared to a patent which is twenty years,44 bothreckoned from the date of the application; and third, the provisions on utility model dispense with its substantive

examination45 and prefer for a less complicated system.

Being plain automotive spare parts that must conform to the original structural design of the components they seek toreplace, the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not ornamental. They lack the decorative

quality or value that must characterize authentic works of applied art. They are not even artistic creations with

incidental utilitarian functions or works incorporated in a useful article. In actuality, the personal properties describedin the search warrants are mechanical works, the principal function of which is utility sans any aesthetic

embellishment.

Neither are we to regard the Leaf Spring Eye Bushing and Vehicle Bearing Cushion as included in the catch-all phrase"other literary, scholarly, scientific and artistic works" in Section 172.1(a) of R.A. No. 8293. Applying the principle

of ejusdem generis which states that "where a statute describes things of a particular class or kind accompanied by

words of a generic character, the generic word will usually be limited to things of a similar nature with those particularly enumerated, unless there be something in the context of the state which would repel such

inference,"46 the Leaf Spring Eye Bushing and Vehicle Bearing Cushion are not copyrightable, being not of the samekind and nature as the works enumerated in Section 172 of R.A. No. 8293.

No copyright granted by law can be said to arise in favor of the petitioner despite the issuance of the certificates of

copyright registration and the deposit of the Leaf Spring Eye Bushing and Vehicle Bearing Cushion. Indeed,in Joaquin, Jr. v. Drilon47 and Pearl & Dean (Phil.), Incorporated v. Shoemart, Incorporated ,48 the Court ruled that:

Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted by thestatute, and not simply a pre-existing right regulated by it. Being a statutory grant, the rights are only such as the

statute confers, and may be obtained and enjoyed only with respect to the subjects and by the persons, and on termsand conditions specified in the statute. Accordingly, it can cover only the works falling within the statutory

enumeration or description.That the works of the petitioner may be the proper subject of a patent does not entitle him to the issuance of a searchwarrant for violation of copyright laws. In Kho v. Court of Appeals49 and Pearl & Dean (Phil.), Incorporated v.

Shoemart, Incorporated ,50 the Court ruled that "these copyright and patent rights are completely distinct and separate

from one another, and the protection afforded by one cannot be used interchangeably to cover items or worksthat exclusively pertain to the others." The Court expounded further, thus:

Trademark, copyright and patents are different intellectual property rights that cannot be interchanged with one

another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods. In relation thereto, a trade name means the

name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined to




















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Cases on Copyright

literary and artistic works which are original intellectual creations in the literary and artistic domain protected from

the moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem in

any field of human activity which is new, involves an inventive step and is industrially applicable.

The petitioner cannot find solace in the ruling of the United States Supreme Court in Mazer v. Stein51 to buttress his petition. In that case, the artifacts involved in that case were statuettes of dancing male and female figures made of

semi-vitreous china. The controversy therein centered on the fact that although copyrighted as "works of art," thestatuettes were intended for use and used as bases for table lamps, with electric wiring, sockets and lampshades

attached. The issue raised was whether the statuettes were copyright protected in the United States, considering thatthe copyright applicant intended primarily to use them as lamp bases to be made and sold in quantity, and carried such

intentions into effect. At that time, the Copyright Office interpreted the 1909 Copyright Act to cover works of artistic

craftsmanship insofar as their form, but not the utilitarian aspects, were concerned. After reviewing the history andintent of the US Congress on its copyright legislation and the interpretation of the copyright office, the US Supreme

Court declared that the statuettes were held copyrightable works of art or models or designs for works of art. The HighCourt ruled that:

"Works of art (Class G) – (a) – In General. This class includes works of artistic craftsmanship, in so far as their form

but not their mechanical or utilitarian aspects are concerned, such as artistic jewelry, enamels, glassware, andtapestries, as well as all works belonging to the fine arts, such as paintings, drawings and sculpture. …"

So we have a contemporaneous and long-continued construction of the statutes by the agency charged to administer them that would allow the registration of such a statuette as is in question here .52

The High Court went on to state that "[t]he dichotomy of protection for the aesthetic is not beauty and utility but art

for the copyright and the invention of original and ornamental design for design patents." Significantly, the copyrightoffice promulgated a rule to implement Mazer to wit:

… [I]f "the sole intrinsic function of an article is its utility, the fact that the work is unique and attractively shaped will

not qualify it as a work of art."

In this case, the bushing and cushion are not works of art. They are, as the petitioner himself admitted, utility models

which may be the subject of a patent.

IN LIGHT OF ALL THE FOREGOING, the instant petition is hereby DENIED for lack of merit. The assailed

Decision and Resolution of the Court of Appeals in CA-G.R. SP No. 70411 are AFFIRMED. Search Warrant Nos. 01-2401 and 01-2402 issued on October 15, 2001 are ANNULLED AND SET ASIDE. Costs against the petitioner.

SO ORDERED.











Cases on Copyright

G.R. No. 147043 June 21, 2005

NBI - MICROSOFT CORPORATION & LOTUS DEVELOPMENT CORP., petitioners,vs.

JUDY C. HWANG, BENITO KEH & YVONNE K. CHUA/BELTRON COMPUTER PHILIPPINES INC.,

JONATHAN K. CHUA, EMILY K. CHUA, BENITO T. SANCHEZ, NANCY I. VELASCO, ALFONSO CHUA,

ALBERTO CHUA, SOPHIA ONG, DEANNA CHUA/TAIWAN MACHINERY DISPLAY & TRADE CENTER,INC., and THE SECRETARY OF JUSTICE, respondents.

D E C I S I O N

CARPIO, J.:

The Case

This is a petition for certiorar i1 of the Resolutions2 of the Department of Justice dismissing for "lack of merit and

insufficiency of evidence" petitioner Microsoft Corporation’s complaint against respondents for copyrightinfringement and unfair competition.

The Facts

Petitioner Microsoft Corporation ("Microsoft"), a Delaware, United States corporation, owns the copyright andtrademark to several computer software.3 Respondents Benito Keh and Yvonne Keh are the President/Managing

Director and General Manager, respectively, of respondent Beltron Computer Philippines, Inc. ("Beltron"), a domesticcorporation. Respondents Jonathan K. Chua, Emily K. Chua, Benito T. Sanchez, and Nancy I. Velasco are Beltron’s

Directors. On the other hand, respondents Alfonso Chua, Alberto Chua, Judy K. Chua Hwang, Sophia Ong, andDeanna Chua are the Directors of respondent Taiwan Machinery Display & Trade Center, Inc. ("TMTC"), also a

domestic corporation.4

In May 1993, Microsoft and Beltron entered into a Licensing Agreement ("Agreement"). Under Section 2(a) of the

Agreement, as amended in January 1994, Microsoft authorized Beltron, for a fee, to:

(i) xxx reproduce and install no more than one (1) copy of [Microsoft] software on each Customer System hard disk or Read Only Memory ("ROM"); [and]

(ii) xxx distribute directly or indirectly and license copies of the Product (reproduced as per Section 2(a)(i) and/or acquired from Authorized Replicator or Authorized Distributor) in object code form to end users[.] xxxx5

The Agreement also authorized Microsoft and Beltron to terminate the contract if the other fails to comply with any of the Agreement’s provisions. Microsoft terminated the Agreement effective 22 June 1995 for Beltron’s non-payment of royalties.6

Afterwards, Microsoft learned that respondents were illegally copying and selling Microsoft software. Consequently,Microsoft, through its Philippine agent,7 hired the services of Pinkerton Consulting Services ("PCS"), a private

investigative firm. Microsoft also sought the assistance of the National Bureau of Investigation ("NBI"). On 10 November 1995, PCS employee John Benedic8 Sacriz ("Sacriz") and NBI agent Dominador Samiano, Jr. ("Samiano"),

posing as representatives of a computer shop,9 bought computer hardware (central processing unit ("CPU") andcomputer monitor) and software (12 computer disks ("CDs") in read-only memory ("ROM") format) from

respondents. The CPU contained pre-installed10 Microsoft Windows 3.1 and MS-DOS software. The 12 CD-ROMs,encased in plastic containers with Microsoft packaging, also contained Microsoft software. 11 At least two of the CD-

ROMs were "installers," so-called because they contain several software (Microsoft only or both Microsoft and non-

Microsoft).12 Sacriz and Samiano were not given the Microsoft end-user license agreements, user’s manuals,registration cards or certificates of authenticity for the articles they purchased. The receipt issued to Sacriz and

Samiano for the CPU and monitor bore the heading "T.M.T.C. (PHILS.) INC. BELTRON COMPUTER. "13 Thereceipt for the 12 CD-ROMs did not indicate its source although the name "Gerlie" appears below the entry "delivered

by."14

On 17 November 1995, Microsoft applied for search warrants against respondents in the Regional Trial Court, Branch23, Manila ("RTC").15 The RTC granted Microsoft’s application and issued two search warrants ("Search Warrant

Nos. 95-684 and 95-685").16 Using Search Warrant Nos. 95-684 and 95-685, the NBI searched the premises of Beltron and TMTC and seized several computer-related hardware, software, accessories, and paraphernalia. Among

these were 2,831 pieces of CD-ROMs containing Microsoft software.17



































































Cases on Copyright

Based on the articles obtained from respondents, Microsoft and a certain Lotus Development Corporation ("Lotus

Corporation") charged respondents before the Department of Justice ("DOJ") with copyright infringement under

Section 5(A) in relation to Section 29 of Presidential Decree No. 49, as amended, ("PD 49") 18 and with unfair competition under Article 189(1)19 of the Revised Penal Code. In its Complaint ("I.S. No. 96-193"), which the NBI

indorsed, Microsoft alleged that respondents illegally copied and sold Microsoft software.20

In their joint counter-affidavit, respondents Yvonne Keh ("respondent Keh") and Emily K. Chua ("respondent Chua")denied the char ges against respondents. Respondents Keh and Chua alleged that: (1) Microsoft’s real intention in

filing the complaint under I.S. No. 96-193 was to pressure Beltron to pay its alleged unpaid royalties, thus Microsoftshould have filed a collection suit instead of a criminal complaint; (2) TMTC bought the confiscated 59 boxes of MS-

DOS CDs from a Microsoft dealer in Singapore (R.R. Donnelly); (3) respondents are not the "source" of the Microsoft

Windows 3.1 software pre-installed in the CPU bought by Sacriz and Samiano, but only of the MS-DOS software; (4)Microsoft’s alleged proof of purchase (receipt) for the 12 CD-ROMs is inconclusive because the receipt does not

indicate its source; and (5) respondents Benito Keh, Jonathan K. Chua, Alfonso Chua, Alberto Chua, Judy K. ChuaHwang, Sophia Ong, and Deanna Chua are stockholders of Beltron and TMTC in name only and thus cannot be held

criminally liable.21

The other respondents did not file counter-affidavits.

Meanwhile, respondents moved to quash Search Warrant Nos. 95-684 and 95-685. The RTC partially granted their

motion in its Order of 16 April 1996. Microsoft sought reconsideration but the RTC denied Microsoft’s motion in itsOrder of 19 July 1996. Microsoft appealed to the Court of Appeals in CA-G.R. CV No. 54600. In its Decision of 29

November 2001, the Court of Appeals granted Microsoft’s appeal and set aside the RTC Orders of 16 April 1996 and19 July 1996. The Cour t of Appeals’ Decision became final on 27 December 2001.

The DOJ Resolutions

In the Resolution of 26 October 1999, DOJ State Prosecutor Jocelyn A. Ong ("State Prosecutor Ong") recommendedthe dismissal of Microsoft’s complaint for lack of merit and insufficiency of evidence. State Prosecutor Ong also

recommended the dismissal of Lotus Corporation’s complaint for lack of interest to prosecute and for insufficiency of evidence. Assistant Chief State Prosecutor Lualhati R. Buenafe ("Assistant Chief State Prosecutor Buenafe") approved

State Prosecutor Ong’s recommendations.22 The 26 October 1999 Resolution reads in part:

[T]wo (2) issues have to be resolved in this case, namely:

a) Whether or not Beltron Computer and/or its stockholders should be held liable for the offenses charged.

b) Whether or not prima facie case exist[s] against Taiwan Machinery Display and Trade Center, Inc. (TMTC) for violation of the offense charged.

Complainant had alleged that from the time the license agreement was terminated, respondent/s is/are no longer

authorized to copy/distribute/sell Microsoft products. However, respondent/s averred that the case is civil in nature,not criminal, considering that the case stemmed only out of the desire of complainant to collect from them the amount

of US$135,121.32 and that the contract entered into by the parties cannot be unilaterally terminated.

In the order of Honorable William Bayhon dated July 19, 1996 [denying reconsideration to the Order partially

quashing the search warrants], he observed the following:

"It is further argued by counsel for respondent that the act taken by private complainant is to spite revenge against therespondent Beltron for the latter failed to pay the alleged monetary obligation in the amount of US$135,121.32. That

respondent has some monetary obligation to complainant which is not denied by the complainant."

["]It appears therefore that prior to the issuance of the subject search warrants, complainant had some business

transactions with the respondent [Beltron] along the same line of products. Complainant failed to reveal the truecircumstances existing between the two of them as it now appears, indeed the search warrant[s] xxx [are] being used

as a leverage to secure collection of the money obligation which the Court cannot allow."

From said order, it can be gleaned that the [RTC] xxx, had admitted that the search warrants applied for bycomplainant were merely used as a leverage for the collection of the alleged monetary obligation of the respondent/s.

From said order, it can be surmise (sic) that the obligations between the parties is civil in nature not criminal.

Moreover, complainant had time and again harped that respondent/s is/are not authorized to sell/copy/distribute






















Cases on Copyright

Microsoft products at the time of the execution of the search warrants. Still, this office has no power to pass upon said

issue for one has then to interpret the provisions of the contract entered into by the parties, which question, should be

raised in a proper civil proceeding.

Accordingly, absen[t] a resolution from the proper court of (sic) whether or not the contract is still binding betweenthe parties at the time of the execution of the search warrants, this office cannot pass upon the issue of whether

respondent/s is or are liable for the offense charged.

As to the second issue, we find for the respondent/s. TMTC had provided sufficient evidence such as pro-forma

invoice from R.R. Donnelley; Debt Advice of the Bank of Commerce; Official Receipts from the Bureau of Customs;and Import Entry Declaration of the Bureau of Customs to prove that indeed the Microsoft software in their

possession were bought from Singapore.

Thus, respondent/s in this case has/have no intent to defraud the public, as provided under Article 189 of the RevisedPenal Code, for they bought said Microsoft MS-DOS 6.0 from an alleged licensee of Microsoft in Singapore, with all

the necessary papers. In their opinion, what they have are genuine Microsoft software, therefore no unfair competition

exist.

Moreover, violation of P.D. 49 does not exist, for respondent/s was/were not the manufacturers of the Microsoftsoftware seized and were selling their products as genuine Microsoft software, considering that they bought it from a

Microsoft licensee.

Complainant, on the other hand, considering that it has the burden of proving that the respondent/s is/are liable for the

offense charged, has not presented any evidence that the items seized namely the 59 boxes of MS-DOS 6.0 softwareare counterfeit.

The certification issued on December 12, 1995 by Christopher Austin, Corporate Attorney of the complainant, does

not disclose this fact. For the term used by Mr. Austin was that the items seized were unauthorized.

The question now, is whether the products were unauthorized because TMTC has no license to sell Microsoft products,

or is it unauthorized because R.R. Donnelley has no authority to sell said products here in the Philippines.

Still, to determine the culpability of the respondents, complainant should present evidence that what is in the possession of the respondent/s is/are counterfeit Microsoft products.

This it failed to do.23

Microsoft sought reconsideration and prayed for an ocular inspection of the articles seized from respondents. However,

in the Resolution of 3 December 1999, Assistant Chief State Prosecutor Buenafe, upon State Prosecutor O ng’srecommendation, denied Microsoft’s motion.24

Microsoft appealed to the Office of the DOJ Secretary. In the Resolution of 3 August 2000, DOJ Undersecretary Regis

V. Puno dismissed Microsoft’s appeal.25 Microsoft sought reconsideration but its motion was denied in the Resolutionof 22 December 2000.26

Hence, this petition. Microsoft contends that:

I. THE DOJ ERRED IN RULING THAT THE LIABILITY OF RESPONDENTS WAS ONLY CIVIL IN NATURE

BY VIRTUE OF THE LICENSE AGREEMENT.

II. THE DOJ MISAPPRECIATED THE FACT THAT RESPONDENTS WERE ENGAGED IN THEILLEGAL IMPORTATION, SALE AND DISTRIBUTION OF COUNTERFEIT SOFTWARE AS

EVIDENCED BY THE ITEMS PURCHASED DURING THE TEST-BUY AND THE ITEMS SEIZEDFROM RESPONDENTS’ PREMISES.

III. THE DOJ MISAPPRECIATED THE LAW ON COPYRIGHT INFRINGEMENT AND UNFAIR

COMPETITION.

IV. ONLY TWO OUT OF THE NINE RESPONDENTS BOTHERED TO FILE COUNTER-AFFIDAVITS; HENCE, THE CHARGES AGAINST SEVEN [RESPONDENTS] REMAIN

UNCONTROVERTED.27























Cases on Copyright

In its Comment, filed by the Solicitor General, the DOJ maintains that it did not commit grave abuse of discretion in

dismissing Microsoft’s complaint.28

For their part, respondents allege in their Comment that Microsoft is guilty of forum-shopping because its petition in

CA-G.R. CV No. 54600 was filed ahead of, and has a "common interest" with, this petition. On the merits,respondents reiterate their claims in their motion to quash Search Warrant Nos. 95-684 and 95-685 that the articles

seized from them were either owned by others, purchased from legitimate sources, or not produced by Microsoft.Respondents also insist that the Agreement entitled Beltron to "copy and replicate or reproduce" Microsoft products.

On the confiscated 2,831 CD-ROMs, respondents allege that a certain corporation29 left the CD-ROMs with them for safekeeping. Lastly, respondents claim that there is no proof that the CPU Sacriz and Samiano bought from them

contained pre-installed Microsoft software because the receipt for the CPU does not indicate "[s]oftware hard

disk." 30

In its Reply, Microsoft counters that it is not liable for forum-shopping because its petition in CA-G.R. CV No. 54600involved the Orders of the RTC partially quashing Search Warrant Nos. 95-684 and 95-685 while this petition

concerns the DOJ Resolutions dismissing its complaint against respondents for copyright infringement and unfair competition. On the merits, Microsoft maintains that respondents should be indicted for copyright infringement and

unfair competition.31

The Issues

The petition raises the following issues:

(1) Whether Microsoft engaged in forum-shopping; and

(2) Whether the DOJ acted with grave abuse of discretion in not finding probable cause to charge respondents withcopyright infringement and unfair competition.

The Ruling of the Court

The petition has merit.

M icrosoft did not Engage in F orum-Shopping

Forum-shopping takes place when a litigant files multiple suits involving the same parties, either simultaneously or

successively, to secure a favorable judgment.32 Thus, it exists where the elements of litis pendentia are present,namely: (a) identity of parties, or at least such parties who represent the same interests in both actions; (b) identity of

rights asserted and relief prayed for, the relief being founded on the same facts; and (c) the identity with respect to the

two preceding particulars in the two cases is such that any judgment that may be rendered in the pending case,regardless of which party is successful, would amount to res judicata in the other case.33 Forum-shopping is an act of malpractice because it abuses court processes.34 To check this pernicious practice, Section 5, Rule 7 of the 1997

Rules of Civil Procedure requires the principal party in an initiatory pleading to submit a certification against forum-shopping.35 Failure to comply with this requirement is a cause for the dismissal of the case and, in case of willful

forum-shopping, for the imposition of administrative sanctions.

Here, Microsoft correctly contends that it is not liable for forum-shopping. What Microsoft appealed in CA-G.R. CV

No. 54600 were the RTC Orders partially quashing Search Warrant Nos. 95-684 and 95-685. In the present case,Microsoft is appealing from the DOJ Resolutions dismissing its complaint against respondents for copyright

infringement and unfair competition. Thus, although the parties in CA-G.R. CV No. 54600 and this petition areidentical, the rights asserted and the reliefs prayed for are not such that the judgment in CA-G.R. CV No. 54600 does

not amount to res judicata in the present case. This renders forum-shopping impossible here.

The DOJ Acted with Grave Abuse of Di scretion

in not F inding Probable Cause to Charge Respondents wi th

Copyright In fr ingement and Unfair Competition

Generally, this Court is loath to interfere in the prosecutor’s discretion in determining probable cause36 — unless such

discretion is shown to have been abused.37 This case falls under the exception.

Unlike the higher quantum of proof beyond reasonable doubt required to secure a conviction, it is the lower standard

of probable cause which is applied during the preliminary investigation to determine whether the accused should beheld for trial. This standard is met if the facts and circumstances incite a reasonable belief that the act or omission

complained of constitutes the offense charged. As we explained in Pil apil v. Sandiganbayan :38













































Cases on Copyright

The term [probable cause] does not mean "actual and positive cause" nor does it import absolute certainty. It is merely

based on opinion and reasonable belief. Thus, a finding of probable cause does not require an inquiry into whether

there is sufficient evidence to procure a conviction. It is enough that it is believed that the act or omission complainedof constitutes the offense charged. Precisely, there is a trial for the reception of evidence of the prosecution in support

of the charge.

PD 49 and Arti cle 189(1)

Section 539 of PD 49 ("Section 5") enumerates the rights vested exclusively on the copyright owner. Contrary to the

DOJ’s ruling, the gravamen of copyright infringement is not merely the unauthorized "manufacturing" of inte llectualworks but rather the unauthorized performance of any of the acts covered by Section 5. Hence, any person who

performs any of the acts under Section 5 without obtaining the copyright owner’s prior consent renders himself civilly40 and criminally41 liable for copyright infringement. We held in Columbia Pictures, Inc. v. Court of

Appeals :42

Infringement of a copyright is a trespass on a private domain owned and occupied by the owner of the copyright, and,

therefore, protected by law, and infringement of copyright, or piracy, which is a synonymous term in this connection,consists in the doing by any person, without the consent of the owner of the copyright, of anything the sole right to do

which is conferred by statute on the owner of the copyright. (Emphasis supplied)

Significantly, under Section 5(A), a copyright owner is vested with the exclusive right to "copy, distribute, multiply,[and] sell" his intellectual works.

On the other hand, the elements of unfair competition under Article 189(1)43 of the Revised Penal Code are:

(a) That the offender gives his goods the general appearance of the goods of another manufacturer or dealer;

(b) That the general appearance is shown in the (1) goods themselves, or in the (2) wrapping of their packages, or inthe (3) device or words therein, or in (4) any other feature of their appearance[;]

(c) That the offender offers to sell or sells those goods or gives other persons a chance or opportunity to do the samewith a like purpose[; and]

(d) That there is actual intent to deceive the public or defraud a competitor .44

The element of intent to deceive may be inferred from the similarity of the goods or their appearance.45

On the Suff iciency of Evidence to

Support a F inding of Probable Cause Agai nst Respondents

In its pleadings filed with the DOJ, Microsoft invoked three clusters of evidence to support its complaint against

respondents, namely: (1) the 12 CD-ROMs containing Microsoft software Sacriz and Samiano bought fromrespondents; (2) the CPU with pre-installed Microsoft software Sacriz and Samiano also purchased from respondents;

and (3) the 2,831 CD-ROMs containing Microsoft software seized from respondents.46 The DOJ, on the one hand,refused to pass upon the relevance of these pieces of evidence because: (1) the "obligations between the parties is civil

and not criminal" considering that Microsoft merely sought the issuance of Search Warrant Nos. 95-684 and 95-685 to pressure Beltron to pay its obligation under the Agreement, and (2) the validity of Microsoft’s termination of the

Agreement must first be resolved by the "proper court." On the other hand, the DOJ ruled that Microsoft failed to present evidence proving that what were obtained from respondents were counterfeit Microsoft products.

This is grave abuse of discretion.47

First. Being the copyright and trademark owner of Microsoft software, Microsoft acted well within its rights in filingthe complaint under I.S. No. 96-193 based on the incriminating evidence obtained from respondents. Hence, it was

highly irregular for the DOJ to hold, based on the RTC Order of 19 July 1996, that Microsoft sought the issuance of Search Warrant Nos. 95-684 and 95-685, and by inference, the filing of the complaint under I.S. No. 96-193, merely

to pressure Beltron to pay its overdue royalties to Microsoft. Significantly, in its Decision in CA-G.R. CV No. 54600

dated 29 November 2001, the Court of Appeals set aside the RTC Order of 19 July 1996. Respondents no longer contested that ruling which became final on 27 December 2001.

Second. There is no basis for the DOJ to rule that Microsoft must await a prior "resolution from the proper court of

(sic) whether or not the [Agreement] is still binding between the parties." Beltron has not filed any suit to question



































Cases on Copyright

Microsoft’s termination of the Agreement. Microsoft can neither be expected nor compelled to wait until Beltron

decides to sue before Microsoft can seek remedies for violation of its intellectual property rights.

Furthermore, some of the counterfeit CD-ROMs bought from respondents were "installer" CD-ROMs containing

Microsoft software only or both Microsoft and non-Microsoft software. These articles are counterfeit per se becauseMicrosoft does not (and could not have authorized anyone to) produce such CD-ROMs. The copying of the genuine

Microsoft software to produce these fake CD-ROMs and their distribution are illegal even if the copier or distributor is a Microsoft licensee. As far as these installer CD-ROMs are concerned, the Agreement (and the alleged question on

the validity of its termination) is immaterial to the determination of respondents’ liability for copyright infringementand unfair competition.

Lastly, Section 10(b)48 of the Agreement provides that Microsoft’s "rights and remedies" under the contract are "notxxx exclusive and are in addition to any other rights and remedies provided by law or [the] Agreement." Thus, even if

the Agreement still subsists, Microsoft is not precluded from seeking remedies under PD 49 and Article 189(1) of theRevised Penal Code to vindicate its rights.

Third. The Court finds that the 12 CD-ROMs ("installer" and "non-installer") and the CPU with pre-installedMicrosoft software Sacriz and Samiano bought from respondents and the 2,831 Microsoft CD-ROMs seized from

respondents suffice to support a finding of probable cause to indict respondents for copyright infringement under Section 5(A) in relation to Section 29 of PD 49 for unauthorized copying and selling of protected intellectual works.

The installer CD-ROMs with Microsoft software, to repeat, are counterfeit per se. On the other hand, the illegality of the "non-installer" CD-ROMs purchased from respondents and of the Microsoft software pre-installed in the CPU is

shown by the absence of the standard features accompanying authentic Microsoft products, namely, the Microsoftend-user license agreements, user’s manuals, registration cards or certificates of authenticity.

On the 2,831 Microsoft CD-ROMs49 seized from respondents, respondent Beltron, the only respondent who was

party to the Agreement, could not have reproduced them under the Agreement as the Solicitor General50 and

respondents contend. Beltron’s rights51 under the Agreement were limited to:

(1) the "reproduc[tion] and install[ation of] no more than one copy of [Microsoft] software on each Customer Systemhard disk or Read Only Memory ("ROM")"; and

(2) the "distribut[ion] xxx and licens[ing of] copies of the [Microsoft] Product [as reproduced above] and/or

acquired from Authorized Replicator or Authorized Distributor) in object code form to end users."

The Agreement defines an authorized replicator as "a third party approved by [Microsoft] which may reproduce and

manufacture [Microsoft] Product[s] for [Beltron] xxx."52 An authorized distributor, on the other hand, is a "third partyapproved by [Microsoft] from which [Beltron] may purchase MED 53 Product."54 Being a mere reproducer/installer

of one Microsoft software copy on each customer’s hard disk or ROM, Beltron could only have acquired the hundredsof Microsoft CD-ROMs found in respondents’ possession from Microsoft distributors or replicators.

However, respondents makes no such claim. What respondents contend is that these CD-ROMs were left to them for safekeeping. But neither is this claim tenable for lack of substantiation. Indeed, respondents Keh and Chua, the only

respondents who filed counter-affidavits, did not make this claim in the DOJ. These circumstances give rise to thereasonable inference that respondents mass-produced the CD-ROMs in question without securing Microsoft’s prior

authorization.

The counterfeit "non-installer" CD-ROMs Sacriz and Samiano bought from respondents also suffice to support a

finding of probable cause to indict respondents for unfair competition under Article 189(1) of the Revised Penal Codefor passing off Microsoft products. From the pictures of the CD-ROMs’ packaging,55 one cannot distinguish them

from the packaging of CD-ROMs containing genuine Microsoft software. Such replication, coupled with thesimilarity of content of these fake CD-ROMs and the CD-ROMs with genuine Microsoft software, implies intent to

deceive.

Respondents’ contention that the 12 CD-ROMs Sacriz and Samiano purchased cannot be traced to them because thereceipt for these articles does not indicate its source is unavailing. The receipt in question should be taken together

with Microsoft’s claim that Sacriz and Samiano bought the CD-ROMs from respondents.56 Together, theseconsiderations point to respondents as the vendor of the counterfeit CD-ROMs. Respondents do not give any reason

why the Court should not give credence to Microsoft’s claim. For the same reason, the fact that the receipt for the

CPU does not indicate "[s]oftware hard disk" does not mean that the CPU had no pre-installed Microsoft software.Respondents Keh and Chua admit in their counter-affidavit that respondents are the "source" of the pre-installed MS-






































Cases on Copyright

DOS software.

WHEREFORE, we GRANT the petition. We SET ASIDE the Resolutions dated 26 October 1999, 3 December 1999,3 August 2000, and 22 December 2000 of the Department of Justice.

SO ORDERED.



Cases on Copyright

G.R. No. 148222 August 15, 2003

PEARL & DEAN (PHIL.), INCORPORATED, Petitioner,vs.

SHOEMART, INCORPORATED, and NORTH EDSA MARKETING, INCORPORATED, Respondents.

D E C I S I O N

CORONA, J.:

In the instant petition for review on certiorari under Rule 45 of the Rules of Court, petitioner Pearl & Dean (Phil.) Inc.

(P & D) assails the May 22, 2001 decision1 of the Court of Appeals reversing the October 31, 1996 decision2of theRegional Trial Court of Makati, Branch 133, in Civil Case No. 92-516 which declared private respondents Shoemart

Inc. (SMI) and North Edsa Marketing Inc. (NEMI) liable for infringement of trademark and copyright, and unfair

competition.

FACTUAL ANTECEDENTS

The May 22, 2001 decision of the Court of Appeals3 contained a summary of this dispute:

"Plaintiff-appellant Pearl and Dean (Phil.), Inc. is a corporation engaged in the manufacture of advertising display

units simply referred to as light boxes. These units utilize specially printed posters sandwiched between plastic sheetsand illuminated with back lights. Pearl and Dean was able to secure a Certificate of Copyright Registration dated

January 20, 1981 over these illuminated display units. The advertising light boxes were marketed under the trademark "Poster Ads". The application for registration of the trademark was filed with the Bureau of Patents, Trademarks and

Technology Transfer on June 20, 1983, but was approved only on September 12, 1988, per Registration No. 41165.From 1981 to about 1988, Pearl and Dean employed the services of Metro Industrial Services to manufacture its

advertising displays.

Sometime in 1985, Pearl and Dean negotiated with defendant-appellant Shoemart, Inc. (SMI) for the lease and

installation of the light boxes in SM City North Edsa. Since SM City North Edsa was under construction at that time,SMI offered as an alternative, SM Makati and SM Cubao, to which Pearl and Dean agreed. On September 11, 1985,

Pearl and Dean’s General Manager, Rodolfo Vergara, submitted for signature the contracts covering SM Cubao andSM Makati to SMI’s Advertising Promotions and Publicity Division Manager, Ramonlito Abano. Only the contract for

SM Makati, however, was returned signed. On October 4, 1985, Vergara wrote Abano inquiring about the other contract and reminding him that their agreement for installation of light boxes was not only for its SM Makati branch,

but also for SM Cubao. SMI did not bother to reply.

Instead, in a letter dated January 14, 1986, SMI’s house counsel informed Pearl and Dean that it was rescinding the

contract for SM Makati due to non-performance of the terms thereof. In his reply dated February 17, 1986, Vergara protested the unilateral action of SMI, saying it was without basis. In the same letter, he pushed for the signing of the

contract for SM Cubao.

Two years later, Metro Industrial Services, the company formerly contracted by Pearl and Dean to fabricate its displayunits, offered to construct light boxes for Shoemart’s chain of stores. SMI approved the pro posal and ten (10) light

boxes were subsequently fabricated by Metro Industrial for SMI. After its contract with Metro Industrial was

terminated, SMI engaged the services of EYD Rainbow Advertising Corporation to make the light boxes. Some 300units were fabricated in 1991. These were delivered on a staggered basis and installed at SM Megamall and SM City.

Sometime in 1989, Pearl and Dean, received reports that exact copies of its light boxes were installed at SM City and

in the fastfood section of SM Cubao. Upon investigation, Pearl and Dean found out that aside from the two (2)

reported SM branches, light boxes similar to those it manufactures were also installed in two (2) other SM stores. Itfurther discovered that defendant-appellant North Edsa Marketing Inc. (NEMI), through its marketing arm, PrimeSpots Marketing Services, was set up primarily to sell advertising space in lighted display units located in SMI’s

different branches. Pearl and Dean noted that NEMI is a sister company of SMI.

In the light of its discoveries, Pearl and Dean sent a letter dated December 11, 1991 to both SMI and NEMI enjoining

them to cease using the subject light boxes and to remove the same from SMI’s establishments. It also demanded thediscontinued use of the trademark "Poster Ads," and the payment to Pearl and Dean of compensatory damages in the

amount of Twenty Million Pesos (P20,000,000.00).

Upon receipt of the demand letter, SMI suspended the leasing of two hundred twenty-four (224) light boxes and

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Cases on Copyright

NEMI took down its advertisements for "Poster Ads" from the lighted display units in SMI’s stores. Claiming that

both SMI and NEMI failed to meet all its demands, Pearl and Dean filed this instant case for infringement of

trademark and copyright, unfair competition and damages.

In denying the charges hurled against it, SMI maintained that it independently developed its poster panels usingcommonly known techniques and available technology, without notice of or reference to Pearl and Dean’s copyright.

SMI noted that the registration of the mark "Poster Ads" was only for stationeries such as letterheads, envelopes, andthe like. Besides, according to SMI, the word "Poster Ads" is a generic term which cannot be appropriated as a

trademark, and, as such, registration of such mark is invalid. It also stressed that Pearl and Dean is not entitled to thereliefs prayed for in its complaint since its advertising display units contained no copyright notice, in violation of

Section 27 of P.D. 49. SMI alleged that Pearl and Dean had no cause of action against it and that the suit was purely

intended to malign SMI’s good name. On this basis, SMI, aside from praying for the dismissal of the case, alsocounterclaimed for moral, actual and exemplary damages and for the cancellation of Pearl and De an’s Certification of

Copyright Registration No. PD-R-2558 dated January 20, 1981 and Certificate of Trademark Registration No. 4165dated September 12, 1988.

NEMI, for its part, denied having manufactured, installed or used any advertising display units, nor having engaged in

the business of advertising. It repleaded SMI’s averments, admissions and denials and prayed for similar reliefs andcounterclaims as SMI."

The RTC of Makati City decided in favor of P & D:

Wherefore, defendants SMI and NEMI are found jointly and severally liable for infringement of copyright under Section 2 of PD 49, as amended, and infringement of trademark under Section 22 of RA No. 166, as amended, and are

hereby penalized under Section 28 of PD 49, as amended, and Sections 23 and 24 of RA 166, as amended.Accordingly, defendants are hereby directed:

(1) to pay plaintiff the following damages:

(a) actual damages - P16,600,000.00,representing profits

derived by defendants

as a result of infringe-ment of plaintiff’s copyright

from 1991 to 1992

(b) moral damages - P1,000.000.00(c) exemplary damages - P1,000,000.00

(d) attorney’s fees - P1,000,000.00

plus

(e) costs of suit;

(2) to deliver, under oath, for impounding in the National Library, all light boxes of SMI which were fabricated byMetro Industrial Services and EYD Rainbow Advertising Corporation;

(3) to deliver, under oath, to the National Library, all filler-posters using the trademark "Poster Ads", for destruction;and

(4) to permanently refrain from infringing the copyright on plaintiff’s light boxes and its trademark "Poster Ads". Defendants’ counterclaims are hereby ordered dismissed for lack of merit.

SO ORDERED.4

On appeal, however, the Court of Appeals reversed the trial court:

Since the light boxes cannot, by any stretch of the imagination, be considered as either prints, pictorial illustrations,

advertising copies, labels, tags or box wraps, to be properly classified as a copyrightable class "O" work, we have toagree with SMI when it posited that what was copyrighted were the technical drawings only, and not the light boxes

themselves, thus:







Cases on Copyright

42. When a drawing is technical and depicts a utilitarian object, a copyright over the drawings like plaintiff- appellant’s

will not extend to the actual object. It has so been held under jurisprudence, of which the leading case is Baker vs.

Selden (101 U.S. 841 (1879). In that case, Selden had obtained a copyright protection for a book entitled "Selden’sCondensed Ledger or Bookkeeping Simplified" which purported to explain a new system of bookkeeping. Included as

part of the book were blank forms and illustrations consisting of ruled lines and headings, specially designed for usein connection with the system explained in the work. These forms showed the entire operation of a day or a week or a

month on a single page, or on two pages following each other. The defendant Baker then produced forms which weresimilar to the forms illustrated in Selden’s copyrighted books. The Court held that exclusivity to the actual forms is

not extended by a copyright. The reason was that "to grant a monopoly in the underlying art when no examination of its novelty has ever been made would be a surprise and a fraud upon the public; that is the province of letters patent,

not of copyright." And that is precisely the point. No doubt aware that its alleged original design would never pass therigorous examination of a patent application, plaintiff-appellant fought to foist a fraudulent monopoly on the public by

conveniently resorting to a copyright registration which merely employs a recordal system without the benefit of an

in-depth examination of novelty.

The principle in Baker vs. Selden was likewise applied in Muller vs. Triborough Bridge Authority [43 F. Supp. 298(S.D.N.Y. 1942)]. In this case, Muller had obtained a copyright over an unpublished drawing entitled "Bridge

Approach – the drawing showed a novel bridge approach to unsnarl traffic congestion". The defendant constructed a bridge approach which was alleged to be an infringement of the new design illustrated in plaintiff’s drawings. In this

case it was held that protection of the drawing does not extend to the unauthorized duplication of the object drawn because copyright extends only to the description or expression of the object and not to the object i tself. It does not

prevent one from using the drawings to construct the object portrayed in the drawing.

In two other cases, Imperial Homes Corp. v. Lamont , 458 F. 2d 895 and Scholtz Homes, Inc. v. Maddox, 379 F. 2d 84,

it was held that there is no copyright infringement when one who, without being authorized, uses a copyrightedarchitectural plan to construct a structure. This is because the copyright does not extend to the structures themselves.

In fine, we cannot find SMI liable for infringing Pearl and Dean’s copyright over the technical drawings of the latter’s

advertising display units.

xxx xxx xxx

The Supreme Court trenchantly held in Faberge, Incorporated vs. Intermediate Appellate Court that the protective

mantle of the Trademark Law extends only to the goods used by the first user as specified in the certificate of registration, following the clear mandate conveyed by Section 20 of Republic Act 166, as amended, otherwise known

as the Trademark Law, which reads:SEC. 20. Certification of registration prima facie evidence of validity.- A certificate of registration of a mark or trade-

name shall be prima facie evidence of the validity of the registr ation, the registrant’s ownership of the mark or trade-name, and of the registrant’s exclusive right to use the same in connection with the goods, business or

services specified in the certificate, subject to any conditions and limitations stated therein." (underscoring supplied )

The records show that on June 20, 1983, Pearl and Dean applied for the registration of the trademark "Poster Ads"

with the Bureau of Patents, Trademarks, and Technology Transfer. Said trademark was recorded in the PrincipalRegister on September 12, 1988 under Registration No. 41165 covering the following products: stationeries such as

letterheads, envelopes and calling cards and newsletters.

With this as factual backdrop, we see no legal basis to the finding of liability on the part of the defendants-appellantsfor their use of the words "Poster Ads", in the advertising display units in suit. Jurisprudence has interpreted Section

20 of the Trademark Law as "an implicit permission to a manufacturer to venture into the production of goods andallow that producer to appropriate the brand name of the senior registrant on goods other than those stated in the

certificate of registration." The Supreme Court further emphasized the restrictive meaning of Section 20 when it stated,

through Justice Conrado V. Sanchez, that:

Really, if the certificate of registration were to be deemed as including goods not specified therein, then a situationmay arise whereby an applicant may be tempted to register a trademark on any and all goods which his mind may

conceive even if he had never intended to use the trademark for the said goods. We believe that such omnibusregistration is not contemplated by our Trademark Law.

While we do not discount the striking similarity between Pearl and Dean’s registered tr ademark and defendants-appellants’ "Poster Ads" design, as well as the parallel use by which said words were used in the parties’ respective



Cases on Copyright

advertising copies, we cannot find defendants-appellants liable for infringement of trademark. "Poster Ads" was

registered by Pearl and Dean for specific use in its stationeries, in contrast to defendants-appellants who used the same

words in their advertising display units. Why Pearl and Dean limited the use of its trademark to stationeries is simply beyond us. But, having already done so, it must stand by the consequence of the registration which it had caused.

xxx xxx xxx

We are constrained to adopt the view of defendants-appellants that the words "Poster Ads" are a simple contraction of the generic term poster advertising. In the absence of any convincing proof that "Poster Ads" has acquired a secondary

meaning in this jurisdiction, we find that Pearl and Dean’s exclusive right to the use of "Poster Ads" is limited to whatis written in its certificate of registration, namely, stationeries.

Defendants-appellants cannot thus be held liable for infringement of the trademark "Poster Ads".

There being no finding of either copyright or trademark infringement on the part of SMI and NEMI, the monetaryaward granted by the lower court to Pearl and Dean has no leg to stand on.

xxx xxx xxx

WHEREFORE, premises considered, the assailed decision is REVERSED and SET ASIDE, and another is renderedDISMISSING the complaint and counterclaims in the above-entitled case for lack of merit .5

Dissatisfied with the above decision, petitioner P & D filed the instant petition assigning the following errors for the

Court’s consideration:

A. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO COPYRIGHT INFRINGEMENT

WAS COMMITTED BY RESPONDENTS SM AND NEMI;

B. THE HONORABLE COURT OF APPEALS ERRED IN RULING THAT NO INFRINGEMENT OF PEARL &DEAN’S TRADEMARK "POSTER ADS" WAS COMMITTED BY RESPONDENTS SM AND NEMI;

C. THE HONORABLE COURT OF APPEALS ERRED IN DISMISSING THE AWARD OF THE TRIAL COURT,

DESPITE THE LATTER’S FINDING, NOT DISPUTED BY THE HONORABLE COURT OF APPEALS, THAT

SM WAS GUILTY OF BAD FAITH IN ITS NEGOTIATION OF ADVERTISING CONTRACTS WITH PEARL &DEAN.

D. THE HONORABLE COURT OF APPEALS ERRED IN NOT HOLDING RESPONDENTS SM AND NEMI

LIABLE TO PEARL & DEAN FOR ACTUAL, MORAL & EXEMPLARY DAMAGES, ATTORNEY’S FEES AND

COSTS OF SUIT.6 ISSUES

In resolving this very interesting case, we are challenged once again to put into proper perspective four main concernsof intellectual property law — patents, copyrights, trademarks and unfair competition arising from infringement of

any of the first three. We shall focus then on the following issues:

(1) if the engineering or technical drawings of an advertising display unit (light box) are granted copyright protection

(copyright certificate of registration) by the National Library, is the light box depicted in such engineering drawingsipso facto also protected by such copyright?

(2) or should the light box be registered separately and protected by a patent issued by the Bureau of Patents

Trademarks and Technology Transfer (now Intellectual Property Office) — in addition to the copyright of theengineering drawings?

(3) can the owner of a registered trademark legally prevent others from using such trademark if it is a mereabbreviation of a term descriptive of his goods, services or business?

ON THE ISSUE OF COPYRIGHT INFRINGEMENT

Petitioner P & D’s complaint was that SMI infringed on its copyright over the light boxes when SM I had the unitsmanufactured by Metro and EYD Rainbow Advertising for its own account. Obviously, petitioner’s position was

premised on its belief that its copyright over the engineering drawings extended ipso facto to the light boxes depictedor illustrated in said drawings. In ruling that there was no copyright infringement, the Court of Appeals held that the

copyright was limited to the drawings alone and not to the light box itself. We agree with the appellate court.











Cases on Copyright

First, petitioner’s application for a copyright certificate — as well as Copyright Certificate No. PD-R2588 issued by

the National Library on January 20, 1981 — clearly stated that it was for a class "O" work under Section 2 (O) of PD

49 (The Intellectual Property Decree) which was the statute then prevailing. Said Section 2 expressly enumerated theworks subject to copyright:

SEC. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of the

following works:

x x x x x x x x x

(O) Prints, pictorial illustrations, advertising copies, labels, tags, and box wraps;

x x x x x x x x x

Although petitioner’s copyright certificate was entitled "Advertising Display Units" (which depicted the box -typeelectrical devices), its claim of copyright infringement cannot be sustained.

Copyright, in the strict sense of the term, is purely a statutory right. Being a mere statutory grant, the rights are limited

to what the statute confers. It may be obtained and enjoyed only with respect to the subjects and by the persons, and

on terms and conditions specified in the statute.7 Accordingly, it can cover only the works falling within the statutoryenumeration or description.8

P & D secured its copyright under the classification class "O" work. This being so, petitioner’s copyright protection

extended only to the technical drawings and not to the light box itself because the latter was not at all in the categoryof "prints, pictorial illustrations, advertising copies, labels, tags and box wraps." Stated otherwise, even as we find that

P & D indeed owned a valid copyright, the same could have referred only to the technical drawings within thecategory of "pictorial illustrations." It could not have possibly stretched out to include the underlying light box. The

strict application9 of the law’s enumeration in Section 2 prevents us from giving petitioner even a little leeway, that is,even if its copyright certificate was entitled "Advertising Display Units." What the law does not include, it excludes,

and for the good reason: the light box was not a literary or artistic piece which could be copyrighted under the

copyright law. And no less clearly, neither could the lack of statutory authority to make the light box copyrightable beremedied by the simplistic act of entitling the copyright certificate issued by the National Library as "Advertising

Display Units."

In fine, if SMI and NEMI reprinted P & D’s technical drawings for sale to the public without license from P & D, thenno doubt they would have been guilty of copyright infringement. But this was not the case. SMI’s and NEMI’s acts

complained of by P & D were to have units similar or identical to the light box illustrated in the technical drawings

manufactured by Metro and EYD Rainbow Advertising, for leasing out to different advertisers. Was this aninfringement of petitioner’s copyright over the technical drawings? We do not think so.

During the trial, the president of P & D himself admitted that the light box was neither a literary not an artistic work

but an "engineering or marketing invention."10 Obviously, there appeared to be some confusion regarding what oughtor ought not to be the proper subjects of copyrights, patents and trademarks. In the leading case of Kho vs. Court of

Appeals,11 we ruled that these three legal rights are completely distinct and separate from one another, and the protection afforded by one cannot be used interchangeably to cover items or works that exclusively pertain to the

others:


another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods . In relation thereto, a trade name means the

name or designation identifying or distinguishing an enterprise. Meanwhile, the scope of a copyright is confined toliterary and artistic works which are original intellectual creations in the literary and artistic domain protected from

the moment of their creation. Patentable inventions, on the other hand, refer to any technical solution of a problem inany field of human activity which is new, involves an inventive step and is industrially applicable.

ON THE ISSUE OF PATENT INFRINGEMENT

This brings us to the next point: if, despite its manufacture and commercial use of the light boxes without license from petitioner, private respondents cannot be held le gally liable for infringement of P & D’s copyright over its technical

drawings of the said light boxes, should they be liable instead for infringement of patent? We do not think so either.

For some reason or another, petitioner never secured a patent for the light boxes. It therefore acquired no patent rights












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Cases on Copyright

which could have protected its invention, if in fact it really was. And because it had no patent, petitioner could not

legally prevent anyone from manufacturing or commercially using the contraption. In Creser Precision Systems, Inc.

vs. Court of Appeals,12 we held that "there can be no infringement of a patent until a patent has been issued, sincewhatever right one has to the invention covered by the patent arises alone from the grant of patent. x x x (A)n inventor

has no common law right to a monopoly of his invention. He has the right to make use of and vend his invention, butif he voluntarily discloses it, such as by offering it for sale, the world is free to copy and use it with impunity. A patent,

however, gives the inventor the right to exclude all others. As a patentee, he has the exclusive right of making, sellingor using the invention.13 On the assumption that petitioner’s advertising units were patentable inventions, petitioner

revealed them fully to the public by submitting the engineering drawings thereof to the National Library.

To be able to effectively and legally preclude others from copying and profiting from the invention, a patent is a

primordial requirement. No patent, no protection. The ultimate goal of a patent system is to bring new designs andtechnologies into the public domain through disclosure.14 Ideas, once disclosed to the public without the protection of

a valid patent, are subject to appropriation without significant restraint.15

On one side of the coin is the public which will benefit from new ideas; on the other are the inventors who must be protected. As held in Bauer & Cie vs. O’Donnel ,16 "The act secured to the inventor the exclusive right to make use,

and vend the thing patented, and consequently to prevent others from exercising like privileges without the consent of the patentee. It was passed for the purpose of encouraging useful invention and promoting new and useful inventions

by the protection and stimulation given to inventive genius, and was intended to secure to the public, after the lapse of

the exclusive privileges granted the benefit of such inventions and improvements."

The law attempts to strike an ideal balance between the two interests:

"(The p)atent system thus embodies a carefully crafted bargain for encouraging the creation and disclosure of newuseful and non-obvious advances in technology and design, in return for the exclusive right to practice the invention

for a number of years. The inventor may keep his invention secret and reap its fruits indefinitely. In consideration of

its disclosure and the consequent benefit to the community, the patent is granted. An exclusive enjoyment isguaranteed him for 17 years, but upon the expiration of that period, the knowledge of the invention inures to the

people, who are thus enabled to practice it and profit by its use."17

The patent law has a three-fold purpose: "first, patent law seeks to foster and reward invention; second, it promotesdisclosures of inventions to stimulate further innovation and to permit the public to practice the invention once the

patent expires; third, the stringent requirements for patent protection seek to ensure that ideas in the public domainremain there for the free use of the public."18

It is only after an exhaustive examination by the patent office that a patent is issued. Such an in-depth investigation isrequired because "in rewarding a useful invention, the rights and welfare of the community must be fairly dealt with

and effectively guarded. To that end, the prerequisites to obtaining a patent are strictly observed and when a patent isissued, the limitations on its exercise are equally strictly enforced. To begin with, a genuine invention or discovery

must be demonstrated lest in the constant demand for new appliances, the heavy hand of tribute be laid on each slighttechnological advance in art."19

There is no such scrutiny in the case of copyrights nor any notice published before its grant to the effect that a personis claiming the creation of a work. The law confers the copyright from the moment of creation20 and the copyright

certificate is issued upon registration with the National Library of a sworn ex-parte claim of creation.

Therefore, not having gone through the arduous examination for patents, the petitioner cannot exclude others from themanufacture, sale or commercial use of the light boxes on the sole basis of its copyright certificate over the technical

drawings.Stated otherwise, what petitioner seeks is exclusivity without any opportunity for the patent office (IPO) to scrutinize

the light box’s eligibility as a patentable invention. The irony here is that, had petitioner secured a patent instead, itsexclusivity would have been for 17 years only. But through the simplified procedure of copyright-registration with the

National Library — without undergoing the rigor of defending the patentability of its invention before the IPO and the public — the petitioner would be protected for 50 years. This situation could not have been the intention of the law.

In the oft-cited case of Baker vs. Selden21, the United States Supreme Court held that only the expression of an idea is

protected by copyright, not the idea itself . In that case, the plaintiff held the copyright of a book which expounded on

a new accounting system he had developed. The publication illustrated blank forms of ledgers utilized in such asystem. The defendant reproduced forms similar to those illustrated in the plaintiff’s copyrighted book. The US

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Cases on Copyright

Supreme Court ruled that:

"There is no doubt that a work on the subject of book-keeping, though only explanatory of well known systems, may be the subject of a copyright; but, then, it is claimed only as a book. x x x. But there is a clear distinction between the

books, as such, and the art, which it is, intended to illustrate. The mere statement of the proposition is so evident that itrequires hardly any argument to support it. The same distinction may be predicated of every other art as well as that of

bookkeeping. A treatise on the composition and use of medicines, be they old or new; on the construction and use of ploughs or watches or churns; or on the mixture and application of colors for painting or dyeing; or on the mode of

drawing lines to produce the effect of perspective, would be the subject of copyright; but no one would contend thatthe copyright of the treatise would give the exclusive right to the art or manufacture described therein. The copyright

of the book, if not pirated from other works, would be valid without regard to the novelty or want of novelty of its

subject matter. The novelty of the art or thing described or explained has nothing to do with the validity of thecopyright. To give to the author of the book an exclusive property in the art described therein, when no

examination of its novelty has ever been officially made, would be a surprise and a fraud upon the public. That

is the province of letters patent, not of copyright. The claim to an invention of discovery of an art or

manufacture must be subjected to the examination of the Patent Office before an exclusive right therein can be

obtained; and a patent from the government can only secure it.

The difference between the two things, letters patent and copyright, may be illustrated by reference to the subjects just

enumerated. Take the case of medicines. Certain mixtures are found to be of great value in the healing art. If the

discoverer writes and publishes a book on the subject (as regular physicians generally do), he gains no exclusive

right to the manufacture and sale of the medicine; he gives that to the public. If he desires to acquire suchexclusive right, he must obtain a patent for the mixture as a new art, manufacture or composition of matter. He

may copyright his book, if he pleases; but that only secures to him the exclusive right of printing and

publishing his book. So of all other inventions or discoveries.

The copyright of a book on perspective, no matter how many drawings and illustrations it may contain, gives noexclusive right to the modes of drawing described, though they may never have been known or used before. By

publishing the book without getting a patent for the art, the latter is given to the public.

x x x

Now, whilst no one has a right to print or publish his book, or any material part thereof, as a book intended to convey

instruction in the art, any person may practice and use the art itself which he has described and illustrated therein. The

use of the art is a totally different thing from a publication of the book explaining it. The copyright of a book on

bookkeeping cannot secure the exclusive right to make, sell and use account books prepared upon the plan set forth insuch book. Whether the art might or might not have been patented, is a question, which is not before us. It was not patented, and is open and free to the use of the public. And, of course, in using the art, the ruled lines and headings of

accounts must necessarily be used as incident to it.

The plausibility of the claim put forward by the complainant in this case arises from a confusion of ideas produced bythe peculiar nature of the art described in the books, which have been made the subject of copyright. In describing the

art, the illustrations and diagrams employed happened to correspond more closely than usual with the actual work performed by the operator who uses the art. x x x The description of the art in a book, though entitled to the

benefit of copyright, lays no foundation for an exclusive claim to the art itself. The object of the one is

explanation; the object of the other is use. The former may be secured by copyright. The latter can only besecured, if it can be secured at all, by letters patent." (underscoring supplied)

ON THE ISSUE OF TRADEMARK INFRINGEMENT

This issue concerns the use by respondents of the mark "Poster Ads" which petitioner’s president said was a

contraction of "poster advertising." P & D was able to secure a trademark certificate for it, but one where the goods

specified were "stationeries such as letterheads, envelopes, calling cards and newsletters."22 Petitioner admitted it didnot commercially engage in or market these goods. On the contrary, it dealt in electrically operated backlit advertising

units and the sale of advertising spaces thereon, which, however, were not at all specified in the trademark certificate.

Under the circumstances, the Court of Appeals correctly cited Faberge Inc. vs. Intermediate Appellate Court ,23wherewe, invoking Section 20 of the old Trademark Law, ruled that "the certificate of registration issued by the Director of

Patents can confer (upon petitioner) the exclusive right to use its own symbol only to those goods specified in thecertificate, subject to any conditions and limitations specified in the certificate x x x. One who has adopted and used a










Cases on Copyright

trademark on his goods does not prevent the adoption and use of the same trademark by others for products which are

of a different description."24 Faberge, Inc. was correct and was in fact recently reiterated in Canon Kabushiki Kaisha

vs. Court of Appeals.25

Assuming arguendo that "Poster Ads" could validly qualify as a trademark, the failure of P & D to secure a trademark registration for specific use on the light boxes meant that there could not have been any trademark infringement since

registration was an essential element thereof. 1âwphi1

ON THE ISSUE OF UNFAIR COMPETITION

If at all, the cause of action should have been for unfair competition, a situation which was possible even if P & D had

no registration.26 However, while the petitioner’s complaint in the RTC also cited unfair competition, the trial courtdid not find private respondents liable therefor. Petitioner did not appeal this particular point; hence, it cannot now

revive its claim of unfair competition.

But even disregarding procedural issues, we nevertheless cannot hold respondents guilty of unfair competition.

By the nature of things, there can be no unfair competition under the law on copyrights although it is applicable to

disputes over the use of trademarks. Even a name or phrase incapable of appropriation as a trademark or tradenamemay, by long and exclusive use by a business (such that the name or phrase becomes associated with the business or

product in the mind of the purchasing public), be entitled to protection against unfair competition.27 In this case, therewas no evidence that P & D’s use of "Poster Ads" was distinctive or well -known. As noted by the Court of Appeals,

petitioner’s expert witnesses himself had testified that " ‘Poster Ads’ was too generic a name. So it was difficult to

identify it with any company, honestly speaking."28 This crucial admission by its own expert witness that "Poster Ads" could not be associated with P & D showed that, in the mind of the public, the goods and services carrying the

trademark "Poster Ads" could not be distinguished from the goods and services of other entities.

This fact also prevented the application of the doctrine of secondary meaning. "Poster Ads" was generic and incapableof being used as a trademark because it was used in the field of poster advertising, the very business engaged in by

petitioner. "Secondary meaning" means that a word or phrase originally incapable of exclusive appropriation withreference to an article in the market (because it is geographically or otherwise descriptive) might nevertheless have

been used for so long and so exclusively by one producer with reference to his article that, in the trade and to that

branch of the purchasing public, the word or phrase has come to mean that the article was his property.29 Theadmission by petitioner’s own expert witness that he himself could not associate "Poster Ads" with petitioner P & D

because it was "too generic" definitely precluded the application of this exception.

Having discussed the most important and critical issues, we see no need to belabor the rest.All told, the Court finds no reversible error committed by the Court of Appeals when it reversed the Regional Trial

Court of Makati City.

WHEREFORE, the petition is hereby DENIED and the decision of the Court of Appeals dated May 22, 2001 isAFFIRMED in toto.

SO ORDERED.




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Cases on Copyright

G.R. No. 115758 March 19, 2002

ELIDAD C. KHO, doing business under the name and style of KEC COSMETICS LABORATORY, petitioner,vs.

HON. COURT OF APPEALS, SUMMERVILLE GENERAL MERCHANDISING and COMPANY, and ANG

TIAM CHAY, respondents.

DE LEON, JR., J.:

Before us is a petition for review on certiorari of the Decision1 dated May 24, 1993 of the Court of Appeals settingaside and declaring as null and void the Orders2 dated February 10, 1992 and March 19, 1992 of the Regional Trial

Court, Branch 90, of Quezon City granting the issuance of a writ of preliminary injunction.

The facts of the case are as follows:

On December 20, 1991, petitioner Elidad C. Kho filed a complaint for injunction and damages with a prayer for the

issuance of a writ of preliminary injunction, docketed as Civil Case No. Q-91-10926, against the respondentsSummerville General Merchandising and Company (Summerville, for brevity) and Ang Tiam Chay.

The petitioner's complaint alleges that petitioner, doing business under the name and style of KEC CosmeticsLaboratory, is the registered owner of the copyrights Chin Chun Su and Oval Facial Cream Container/Case, as shown

by Certificates of Copyright Registration No. 0-1358 and No. 0-3678; that she also has patent rights onChin Chun Su& Device and Chin Chun Su for medicated cream after purchasing the same from Quintin Cheng, the registered owner

thereof in the Supplemental Register of the Philippine Patent Office on February 7, 1980 under RegistrationCertificate No. 4529; that respondent Summerville advertised and sold petitioner's cream products under the brand

name Chin Chun Su, in similar containers that petitioner uses, thereby misleading the public, and resulting in thedecline in the petitioner's business sales and income; and, that the respondents should be enjoined from allegedly

infringing on the copyrights and patents of the petitioner.

The respondents, on the other hand, alleged as their defense that Summerville is the exclusive and authorized importer,

re-packer and distributor of Chin Chun Su products manufactured by Shun Yi Factory of Taiwan; that the saidTaiwanese manufacturing company authorized Summerville to register its trade name Chin Chun Su Medicated

Cream with the Philippine Patent Office and other appropriate governmental agencies; that KEC CosmeticsLaboratory of the petitioner obtained the copyrights through misrepresentation and falsification; and, that the authority

of Quintin Cheng, assignee of the patent registration certificate, to distribute and market Chin Chun Su products in thePhilippines had already been terminated by the said Taiwanese Manufacturing Company.

After due hearing on the application for preliminary injunction, the trial court granted the same in an Order datedFebruary 10, 1992, the dispositive portion of which reads:

ACCORDINGLY, the application of plaintiff Elidad C. Kho, doing business under the style of KEC Cosmetic

Laboratory, for preliminary injunction, is hereby granted. Consequentially, plaintiff is required to file with the Court a bond executed to defendants in the amount of five hundred thousand pesos (P500,000.00) to the effect that plaintiff

will pay to defendants all damages which defendants may sustain by reason of the injunction if the Court shouldfinally decide that plaintiff is not entitled thereto.

SO ORDERED.3

The respondents moved for reconsideration but their motion for reconsideration was denied by the trial court in anOrder dated March 19, 1992.4

On April 24, 1992, the respondents filed a petition for certiorari with the Court of Appeals, docketed as CA-G.R. SP No. 27803, praying for the nullification of the said writ of preliminary injunction issued by the trial court. After the

respondents filed their reply and almost a month after petitioner submitted her comment, or on August 14 1992, thelatter moved to dismiss the petition for violation of Supreme Court Circular No. 28-91, a circular prohibiting forum

shopping. According to the petitioner, the respondents did not state the docket number of the civil case in the captionof their petition and, more significantly, they did not include therein a certificate of non-forum shopping. The

respondents opposed the petition and submitted to the appellate court a certificate of non-forum shopping for their petition.

On May 24, 1993, the appellate court rendered a Decision in CA-G.R. SP No. 27803 ruling in favor of the respondents,

the dispositive portion of which reads:



Cases on Copyright

WHEREFORE, the petition is hereby given due course and the orders of respondent court dated February 10, 1992

and March 19, 1992 granting the writ of preliminary injunction and denying petitioners' motion for reconsideration are

hereby set aside and declared null and void. Respondent court is directed to forthwith proceed with the trial of CivilCase No. Q-91-10926 and resolve the issue raised by the parties on the merits.

SO ORDERED.5

In granting the petition, the appellate court ruled that:

The registration of the trademark or brandname "Chin Chun Su" by KEC with the supplemental register of the Bureauof Patents, Trademarks and Technology Transfer cannot be equated with registration in the principal register, which is

duly protected by the Trademark Law. 1âwphi1.nêt

xxx xxx xxx

As ratiocinated in La Chemise Lacoste, S.S. vs. Fernandez, 129 SCRA 373, 393:

"Registration in the Supplemental Register, therefore, serves as notice that the registrant is using or has appropriated

the trademark. By the very fact that the trademark cannot as yet be on guard and there are certain defects, some

obstacles which the use must still overcome before he can claim legal ownership of the mark or ask the courts tovindicate his claims of an exclusive right to the use of the same. It would be deceptive for a party with nothing more

than a registration in the Supplemental Register to posture before courts of justice as if the registration is in thePrincipal Register.

The reliance of the private respondent on the last sentence of the Patent office action on application Serial No. 30954

that 'registrants is presumed to be the owner of the mark until after the registration is declared cancelled' is, therefore,misplaced and grounded on shaky foundation. The supposed presumption not only runs counter to the precept

embodied in Rule 124 of the Revised Rules of Practice before the Philippine Patent Office in Trademark Cases butconsidering all the facts ventilated before us in the four interrelated petitions involving the petitioner and the

respondent, it is devoid of factual basis. As even in cases where presumption and precept may factually be reconciled,

we have held that the presumption is rebuttable, not conclusive, (People v. Lim Hoa, G.R. No. L-10612, May 30, 1958,Unreported). One may be declared an unfair competitor even if his competing trademark is registered (Parke, Davis &

Co. v. Kiu Foo & Co., et al., 60 Phil 928; La Yebana Co. v. chua Seco & Co., 14 Phil 534)."6

The petitioner filed a motion for reconsideration. This she followed with several motions to declare respondents incontempt of court for publishing advertisements notifying the public of the promulgation of the assailed decision of

the appellate court and stating that genuine Chin Chun Su products could be obtained only from Summerville General

Merchandising and Co.

In the meantime, the trial court went on to hear petitioner's complaint for final injunction and damages. On October 22,1993, the trial court rendered a Decision7 barring the petitioner from using the trademark Chin Chun Su and

upholding the right of the respondents to use the same, but recognizing the copyright of the petitioner over the ovalshaped container of her beauty cream. The trial court did not award damages and costs to any of the parties but to their

respective counsels were awarded Seventy-Five Thousand Pesos (P75,000.00) each as attorney's fees. The petitioner duly appealed the said decision to the Court of Appeals.

On June 3, 1994, the Court of Appeals promulgated a Resolution8 denying the petitioner's motions for reconsiderationand for contempt of court in CA-G.R. SP No. 27803.

Hence, this petition anchored on the following assignment of errors:

IRESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETIONAMOUNTING TO LACK OF JURISDICTION IN FAILING TO RULE ON PETITIONER'S MOTION TO

DISMISS.

II

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN REFUSING TO PROMPTLY RESOLVE PETITIONER'SMOTION FOR RECONSIDERATION.

III



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IN DELAYING THE RESOLUTION OF PETITIONER'S MOTION FOR RECONSIDERATION, THE

HONORABLE COURT OF APPEALS DENIED PETITIONER'S RIGHT TO SEEK TIMELY APPELLATE RELIEF

AND VIOLATED PETITIONER'S RIGHT TO DUE PROCESS.

IV

RESPONDENT HONORABLE COURT OF APPEALS COMMITTED GRAVE ABUSE OF DISCRETION

AMOUNTING TO LACK OF JURISDICTION IN FAILING TO CITE THE PRIVATE RESPONDENTS INCONTEMPT.9

The petitioner faults the appellate court for not dismissing the petition on the ground of violation of Supreme Court

Circular No. 28-91. Also, the petitioner contends that the appellate court violated Section 6, Rule 9 of the RevisedInternal Rules of the Court of Appeals when it failed to rule on her motion for reconsideration within ninety (90) days

from the time it is submitted for resolution. The appellate court ruled only after the lapse of three hundred fifty-four (354) days, or on June 3, 1994. In delaying the resolution thereof, the appellate court denied the petitioner's right to

seek the timely appellate relief. Finally, petitioner describes as arbitrary the denial of her motions for contempt of

court against the respondents.

We rule in favor of the respondents.

Pursuant to Section 1, Rule 58 of the Revised Rules of Civil Procedure, one of the grounds for the issuance of a writof preliminary injunction is a proof that the applicant is entitled to the relief demanded, and the whole or part of such

relief consists in restraining the commission or continuance of the act or acts complained of, either for a limited period

or perpetually. Thus, a preliminary injunction order may be granted only when the application for the issuance of thesame shows facts entitling the applicant to the relief demanded.10 This is the reason why we have ruled that it must be

shown that the invasion of the right sought to be protected is material and substantial, that the right of complainant isclear and unmistakable, and, that there is an urgent and paramount necessity for the writ to prevent serious damage. 11

In the case at bar, the petitioner applied for the issuance of a preliminary injunctive order on the ground that she is

entitled to the use of the trademark on Chin Chun Su and its container based on her copyright and patent over thesame. We first find it appropriate to rule on whether the copyright and patent over the name and container of a beauty

cream product would entitle the registrant to the use and ownership over the same to the exclusion of others.


another. A trademark is any visible sign capable of distinguishing the goods (trademark) or services (service mark) of an enterprise and shall include a stamped or marked container of goods.12 In relation thereto, a trade name means the

name or designation identifying or distinguishing an enterprise.13 Meanwhile, the scope of a copyright is confined toliterary and artistic works which are original intellectual creations in the literary and artistic domain protected from

the moment of their creation.14 Patentable inventions, on the other hand, refer to any technical solution of a problemin any field of human activity which is new, involves an inventive step and is industrially applicable.15

Petitioner has no right to support her claim for the exclusive use of the subject trade name and its container. The nameand container of a beauty cream product are proper subjects of a trademark inasmuch as the same falls squarely within

its definition. In order to be entitled to exclusively use the same in the sale of the beauty cream product, the user mustsufficiently prove that she registered or used it before anybody else did. The petitioner's copyright and patent

registration of the name and container would not guarantee her the right to the exclusive use of the same for the reasonthat they are not appropriate subjects of the said intellectual rights. Consequently, a preliminary injunction order

cannot be issued for the reason that the petitioner has not proven that she has a clear right over the said name andcontainer to the exclusion of others, not having proven that she has registered a trademark thereto or used the same

before anyone did.We cannot likewise overlook the decision of the trial court in the case for final injunction and damages. The

dispositive portion of said decision held that the petitioner does not have trademark rights on the name and container of the beauty cream product. The said decision on the merits of the trial court rendered the issuance of the writ of a

preliminary injunction moot and academic notwithstanding the fact that the same has been appealed in the Court of Appeals. This is supported by our ruling in La Vista Association , I nc. v. Court of Appeals 16, to wit:

Considering that preliminary injunction is a provisional remedy which may be granted at any time after the

commencement of the action and before judgment when it is established that the plaintiff is entitled to the relief

demanded and only when his complaint shows facts entitling such reliefs xxx and it appearing that the trial court had already granted the issuance of a final injunction in favor of petitioner in its decision rendered after trial on the merits



Cases on Copyright

xxx the Court resolved to Dismiss the instant petition having been rendered moot and academic. An injunction issued

by the trial court after it has already made a clear pronouncement as to the plaintiff's right thereto, that is, after the

same issue has been decided on the merits, the trial court having appreciated the evidence presented, is proper,notwithstanding the fact that the decision rendered is not yet final xxx. Being an ancillary remedy, the proceedings for

preliminary injunction cannot stand separately or proceed independently of the decision rendered on the merit of themain case for injunction. The merit of the main case having been already determined in favor of the applicant, the

preliminary determination of its non-existence ceases to have any force and effect. (italics supplied)

La Vista categorically pronounced that the issuance of a final injunction renders any question on the preliminaryinjunctive order moot and academic despite the fact that the decision granting a final injunction is pending appeal.

Conversely, a decision denying the applicant-plaintiff's right to a final injunction, although appealed, renders moot and

academic any objection to the prior dissolution of a writ of preliminary injunction.

The petitioner argues that the appellate court erred in not dismissing the petition for certiorari for non-compliancewith the rule on forum shopping. We disagree. First, the petitioner improperly raised the technical objection of non-

compliance with Supreme Court Circular No. 28-91 by filing a motion to dismiss the petition for certiorari filed in theappellate court. This is prohibited by Section 6, Rule 66 of the Revised Rules of Civil Procedure which provides that

"(I)n petitions for certiorari before the Supreme Court and the Court of Appeals, the provisions of Section 2, Rule 56,shall be observed. Before giving due course thereto, the court may require the respondents to file their comment

to, and not a motion to dismiss, the petition xxx (italics supplied)". Secondly, the issue was raised one month after

petitioner had filed her answer/comment and after private respondent had replied thereto. Under Section 1, Rule 16 of

the Revised Rules of Civil Procedure, a motion to dismiss shall be filed within the time for but before filing theanswer to the complaint or pleading asserting a claim. She therefore could no longer submit a motion to dismiss nor raise defenses and objections not included in the answer/comment she had earlier tendered. Thirdly, substantial justice

and equity require this Court not to revive a dissolved writ of injunction in favor of a party without any legal rightthereto merely on a technical infirmity. The granting of an injunctive writ based on a technical ground rather than

compliance with the requisites for the issuance of the same is contrary to the primary objective of legal procedurewhich is to serve as a means to dispense justice to the deserving party.

The petitioner likewise contends that the appellate court unduly delayed the resolution of her motion for reconsideration. But we find that petitioner contributed to this delay when she filed successive contentious motions in

the same proceeding, the last of which was on October 27, 1993, necessitating counter-manifestations from privaterespondents with the last one being filed on November 9, 1993. Nonetheless, it is well-settled that non-observance of

the period for deciding cases or their incidents does not render such judgments ineffective or void.17 With respect to

the purported damages she suffered due to the alleged delay in resolving her motion for reconsideration, we find thatthe said issue has likewise been rendered moot and academic by our ruling that she has no right over the trademark and, consequently, to the issuance of a writ of preliminary injunction. 1âwphi1.nêt

Finally, we rule that the Court of Appeals correctly denied the petitioner's several motions for contempt of court.

There is nothing contemptuous about the advertisements complained of which, as regards the proceedings in CA-G.R.

SP No. 27803 merely announced in plain and straightforward language the promulgation of the assailed Decision of the appellate court. Moreover, pursuant to Section 4 of Rule 39 of the Revised Rules of Civil Procedure, the said

decision nullifying the injunctive writ was immediately executory.

WHEREFORE, the petition is DENIED. The Decision and Resolution of the Court of Appeals dated May 24, 1993and June 3, 1994, respectively, are hereby AFFIRMED. With costs against the petitioner.

SO ORDERED.

Bellosillo, Mendoza, Quisumbing, and Buena, JJ., concur.



Cases on Copyright

G.R. No. 108946 January 28, 1999

FRANCISCO G. JOAQUIN, JR., and BJ PRODUCTIONS, INC., petitioners,vs.

HONORABLE FRANKLIN DRILON, GABRIEL ZOSA, WILLIAM ESPOSO, FELIPE MEDINA, JR., andCASEY FRANCISCO, respondents.

MENDOZA, J .:

This is a petition for certiorari. Petitioners seek to annul the resolution of the Department of Justice, dated August 12,1992, in Criminal Case No. Q-92-27854, entitled "Gabriel Zosa, et al . v. City Prosecutor of Quezon City and

Francisco Joaquin, Jr.," and its resolution, dated December 3, 1992, denying petitioner Joaquin's motion for reconsideration.

Petitioner BJ Productions, Inc. (BJPI) is the holder/grantee of Certificate of Copyright No. M922, dated January 28,1971, of Rhoda and Me, a dating game show aired from 1970 to 1977.

On June 28, 1973, petitioner BJPI submitted to the National Library an addendum to its certificate of copyright

specifying the show's format and style of presentation.

On July 14, 1991, while watching television, petitioner Francisco Joaquin, Jr., president of BJPI, saw on RPN Channel

9 an episode of It's a Date, which was produced by IXL Productions, Inc. (IXL). On July 18, 1991, he wrote a letter to private respondent Gabriel M. Zosa, president and general manager of IXL, informing Zosa that BJPI had a copyright

to Rhoda and Me and demanding that IXL discontinue airing It's a Date.

In a letter, dated July 19, 1991, private respondent Zosa apologized to petitioner Joaquin and requested a meeting todiscuss a possible settlement. IXL, however, continued airing It's a Date, prompting petitioner Joaquin to send a

second letter on July 25, 1991 in which he reiterated his demand and warned that, if IXL did not comply, he wouldendorse the matter to his attorneys for proper legal action.

Meanwhile, private respondent Zosa sought to register IXL's copyright to the first episode of It's a Date for which itwas issued by the National Library a certificate of copyright August 14, 1991.

Upon complaint of petitioners, an information for violation of P.D. No. 49 was filed against private respondent Zosa

together with certain officers of RPN Channel 9, namely, William Esposo, Felipe Medina, and Casey Francisco, in the

Regional Trial Court of Quezon City where it was docketed as Criminal Case No. 92-27854 and assigned to Branch104 thereof. However, private respondent Zosa sought a review of the resolution of the Assistant City Prosecutor

before the Department of Justice.

On August 12, 1992, respondent Secretary of Justice Franklin M. Drilon reversed the Assistant City

Prosecutor's findings and directed him to move for the dismissal of the case against private respondents. 1

Petitioner Joaquin filed a motion for reconsideration, but his motion denied by respondent Secretary of Justice onDecember 3, 1992. Hence, this petition. Petitioners contend that:

1. The public respondent gravely abused his discretion amounting to lack of jurisdiction — when he invoked non-

presentation of the master tape as being fatal to the existence of probable cause to prove infringement, despite the fact

that private respondents never raised the same as a controverted issue.

2. The public respondent gravely abused his discretion amounting to lack of jurisdiction when he arrogated unto

himself the determination of what is copyrightable — an issue which is exclusively within the jurisdiction of theregional trial court to assess in a proper proceeding.

Both public and private respondents maintain that petitioners failed to establish the existence of probable cause due to

their failure to present the copyrighted master videotape of Rhoda and Me. They contend that petitioner BJPI'scopyright covers only a specific episode of Rhoda and Me and that the formats or concepts of dating game shows are

not covered by copyright protection under P.D. No. 49.

Non-Assignment of Error.

Petitioners claim that their failure to submit the copyrighted master videotape of the television show Rhoda and Me

was not raised in issue by private respondents during the preliminary investigation and, therefore, it was error for the



Cases on Copyright

Secretary of Justice to reverse the investigating prosecutor's finding of probable cause on this ground.

A preliminary investigation falls under the authority of the state prosecutor who is given by law the power todirect and control criminal

actions. 2 He is, however, subject to the control of the Secretary of Justice. Thus, Rule 112, §4 of the

Revised Rules of Criminal Procedure, provides:

Sec. 4. Duty of investigating fiscal . — If the investigating fiscal finds cause to hold the respondent for trial, he shall

prepare the resolution and corresponding information. He shall certify under oath that he, or as shown by the record,an authorized officer, has personally examined the complainant and his witnesses, that there is reasonable ground to believe that a crime has been committed and that the accused is probably guilty thereof, that the accused was informed

of the complaint and of the evidence submitted against him and that he was given an opportunity to submitcontroverting evidence. Otherwise, he shall recommend dismissal of the complaint.

In either case, he shall forward the records of the case to the provincial or city fiscal or chief state prosecutor withinfive (5) days from his resolution. The latter shall take appropriate action thereon ten (10) days from receipt thereof,

immediately informing the parties of said action.

No complaint or information may be filed or dismissed by an investigating fiscal without the prior written authority or approval of the provincial or city fiscal or chief state prosecutor.

Where the investigating assistant fiscal recommends the dismissal of the case but his findings are reversed by the

provincial or city fiscal or chief state prosecutor on the ground that a probable cause exists, the latter may, by himself,file the corresponding information against the respondent or direct any other assistant fiscal or state prosecutor to doso, without conducting another preliminary investigation.

If upon petition by a proper party, the Secretary of Justice reverses the resolution of the provincial or city fiscal or

chief state prosecutor, he shall direct the fiscal concerned to file the corresponding information without conducting

another preliminary investigation or to dismiss or move for dismissal of the complaint or information.

In reviewing resolutions of prosecutors, the Secretary of Justice is not precluded from considering errors, althoughunassigned, for the purpose of determining whether there is probable cause for filing cases in court. He must make his

own finding, of probable cause and is not confined to the issues raised by the parties during preliminary investigation.Moreover, his findings are not subject to review unless shown to have been made with grave abuse.

Opinion of the Secretary of Justice

Petitioners contend, however, that the determination of the question whether the format or mechanics of a show isentitled to copyright protection is for the court, and not the Secretary of Justice, to make. They assail the following

portion of the resolution of the respondent Secretary of Justice:

[T]he essence of copyright infringement is the copying, in whole or in part, of copyrightable materials as definedand enumerated in Section 2 of PD. No. 49. Apart from the manner in which it is actually expressed, however,the idea of a dating game show is, in the opinion of this Office, a non-copyrightable material. Ideas, concepts,formats, or schemes in their abstract form clearly do not fall within the class of works or materials susceptible of

copyright registration as provided in PD. No. 49. 3 (Emphasis added.)

It is indeed true that the question whether the format or mechanics of petitioners television show is entitled to

copyright protection is a legal question for the court to make. This does not, however, preclude respondent Secretaryof Justice from making a preliminary determination of this question in resolving whether there is probable cause for

filing the case in court. In doing so in this case, he did not commit any grave error.Presentation of Master Tape

Petitioners claim that respondent Secretary of Justice gravely abused his discretion in ruling that themaster videotape should have been predented in order to determine whether there was probable cause for

copyright infringement. They contend that 20th Century Fox Film Corporation v. Court of Appeals, 4 on

which respondent Secretary of Justice relied in reversing the resolution of the investigating prosecutor, isinapplicable to the case at bar because in the present case, the parties presented sufficient evidence whichclearly establish "linkage between the copyright show "Rhoda and Me" and the infringing TV show "It's a

Date." 5



Cases on Copyright

The case of 20th Century Fox Film Corporation involved raids conducted on various videotape outletsallegedlly selling or renting out "pirated" videotapes. The trial court found that the affidavits of NBI agents,given in support of the application for the search warrant, were insufficient without the master tape.

Accordingly, the trial court lifted the search warrants it had previously issued against the defendants. On

petition for review, this Court sustained the action of the trial court and ruled: 6

The presentation of the master tapes of the copyrighted films from which the pirated films were allegedly copied, was

necessary for the validity of search warrants against those who have in their possession the pirated films. The petitioner's argument to the effect that the presentation of the master tapes at the time of application may not be

necessary as these would be merely evidentiary in nature and not determinative of whether or not a probable causeexists to justify the issuance of the search warrants is not meritorious. The court cannot presume that duplicate or

copied tapes were necessarily reproduced from master tapes that it owns.

The application for search warrants was directed against video tape outlets which allegedly were engaged in theunauthorized sale and renting out of copyrighted films belonging to the petitioner pursuant to P.D. 49.

The essence of a copyright infringement is the similarity or at least substantial similarity of the purported piratedworks to the copyrighted work. Hence, the applicant must present to the court the copyrighted films to compare them

with the purchased evidence of the video tapes allegedly pirated to determine whether the latter is an unauthorizedreproduction of the former. This linkage of the copyrighted films to the pirated films must be established to satisfy the

requirements of probable cause. Mere allegations as to the existence of the copyrighted films cannot serve as basis for

the issuance of a search warrant.

This ruling was qualified in the later case of Columbia Pictures, Inc. v. Court of Appeals 7 in which it was

held:

In fine, the supposed pronunciamento in said case regarding the necessity for the presentation of the master tapes of the copyrighted films for the validity of search warrants should at most be understood to merely serve asa guidepost in determining the existence of probable cause in copyright infringement cases where there is doubt as to the true nexus between the master tape and the printed copies . An objective and careful reading of thedecision in said case could lead to no other conclusion than that said directive was hardly intended to be a

sweeping and inflexible requirement in all or similar copyright infringement cases. . . 8

In the case at bar during the preliminary investigation, petitioners and private respondents presented writtendescriptions of the formats of their respective televisions shows, on the basis of which the investigating prosecutor

ruled:

As may [be] gleaned from the evidence on record, the substance of the television productions complainant's "RHODAAND ME" and Zosa's "IT'S A DATE" is that two matches are made between a male and a female, both single, and the

two couples are treated to a night or two of dining and/or dancing at the expense of the show. The major concepts of

both shows is the same. Any difference appear mere variations of the major concepts.

That there is an infringement on the copyright of the show "RHODA AND ME" both in content and in the executionof the video presentation are established because respondent's "IT'S A DATE" is practically an exact copy of

complainant's "RHODA AND ME" because of substantial similarities as follows, to wit:

RHODA AND ME "IT'S A DATE"

Set 1 Set 1

a. Unmarried participant of one gender (searcher) appears on one side of a

divider, while three (3) unmarried participants of the other gender are on theother side of the divider. This arrangement is done to ensure that the searcher does not see the searchees.

a. same

b. Searcher asks a question to be answered by each of the searchees. The

purpose is to determine who among the searchees is the most compatible withthe searcher.

b. same

c. Searcher speculates on the match to the searchee. c. same



Cases on Copyright

d. Selection is made by the use of compute (sic) methods, or by the wayquestions are answered, or similar methods.

d. Selection is based on the answer of the Searchees.

Set 2 Set 2

Same as above with the genders of the searcher and searchees

interchanged. 9

same

Petitioners assert that the format of Rhoda and Me is a product of ingenuity and skill and is thus entitled to copyright protection. It is their position that the presentation of a point-by-point comparison of the formats of the two shows

clearly demonstrates the nexus between the shows and hence establishes the existence of probable cause for copyrightinfringement. Such being the case, they did not have to produce the master tape.

To begin with the format of a show is not copyrightable. Section 2 of P.D. No. 49, 10 otherwise known as

the DECREE ON INTELLECTUAL PROPERTY, enumerates the classes of work entitled to copyrightprotection, to wit:

Sec. 2. The rights granted by this Decree shall, from the moment of creation, subsist with respect to any of thefollowing classes of works:

(A) Books, including composite and cyclopedic works, manuscripts, directories, and gazetteers:

(B) Periodicals, including pamphlets and newspapers;

(C) Lectures, sermons, addresses, dissertations prepared for oral delivery;

(D) Letters;

(E) Dramatic or dramatico-musical compositions; choreographic works and entertainments in dumb shows, the acting

form of which is fixed in writing or otherwise;

(F) Musical compositions, with or without words;

(G) Works of drawing, painting, architecture, sculpture, engraving, lithography, and other works of art; models or

designs for works of art;

(H) Reproductions of a work of art;

(I) Original ornamental designs or models for articles of manufacture, whether or not patentable, and other works of applied art;

(J) Maps, plans, sketches, and charts;

(K) Drawings or plastic works of a scientific or technical character;

(I) Photographic works and works produced by a process analogous to photography lantern slides;

(M) Cinematographic works and works produced by a process analogous to cinematography or any process for making audio-visual recordings;

(N) Computer programs;

(O) Prints, pictorial illustrations advertising copies, labels tags, and box wraps;

(P) Dramatizations, translations, adaptations, abridgements, arrangements and other alterations of literary, musical or artistic works or of works of the Philippine government as herein defined, which shall be protected as provided in

Section 8 of this Decree.

(Q) Collections of literary, scholarly, or artistic works or of works referred to in Section 9 of this Decree which by

reason of the selection and arrangement of their contents constitute intellectual creations, the same to be protected assuch in accordance with Section 8 of this Decree.

(R) Other literary, scholarly, scientific and artistic works.

This provision is substantially the same as §172 of the INTELLECTUAL PROPERTY CODE OF



Cases on Copyright

PHILIPPINES (R.A. No. 8293). 11 The format or mechanics of a television show is not included in the list

of protected works in §2 of P.D. No. 49. For this reason, the protection afforded by the law cannot beextended to cover them.

Copyright, in the strict sense of the term, is purely a statutory right. It is a new or independent right granted bythe statute, and not simply a pre-existing right regulated by the statute. Being a statutory grant, the rights areonly such as the statute confers, and may be obtained and enjoyed only with respect to the subjects and by the

persons and on terms and conditions specified in the statute. 12

Since . . . copyright in published works is purely a statutory creation, a copyright may be obtained only for a work

falling within the statutory enumeration or description. 13

Regardless of the historical viewpoint, it is authoritatively settled in the United States that there is no copyright

except that which is both created and secured by act of Congress . . . . . 14

P.D. No. 49, §2, in enumerating what are subject to copyright, refers to finished works and not to concepts.The copyright does not extend to an idea, procedure, process, system, method of operation, concept,principle, or discovery, regardless of the form in which it is described, explained, illustrated, or embodied in

such work. 15Thus, the new INTELLECTUAL PROPERTY CODE OF THE PHILIPPINES provides:

Sec. 175. Unprotected Subject Matter . — Notwithstanding the provisions of Sections 172 and 173, no protection shall

extend, under this law, to any idea, procedure, system, method or operation, concept, principle, discovery or mere dataas such, even if they are expressed, explained, illustrated or embodied in a work; news of the day and other miscellaneous facts having the character of mere items of press information; or any official text of a legislative,

administrative or legal nature, as well as any official translation thereof.

What then is the subject matter of petitioners' copyright? This Court is of the opinion that petitioner BJPI's copyright

covers audio-visual recordings of each episode of Rhoda and Me, as falling within the class of works mentioned inP.D. 49, §2(M), to wit:

Cinematographic works and works produced by a process analogous to cinematography or any process for making

audio-visual recordings;

The copyright does not extend to the general concept or format of its dating game show. Accordingly, by the very

nature of the subject of petitioner BJPI's copyright, the investigating prosecutor should have the opportunity to

compare the videotapes of the two shows.Mere description by words of the general format of the two dating game shows is insufficient; the presentation of the

master videotape in evidence was indispensable to the determination of the existence of probable cause. As aptly

observed by respondent Secretary of Justice:

A television show includes more than mere words can describe because it involves a whole spectrum of visuals andeffects, video and audio, such that no similarity or dissimilarity may be found by merely describing the general

copyright/format of both dating game shows.

WHEREFORE, the petition is hereby DISMISSED

SO ORDERED.1âwphi1.nêt

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